AIRCRAFT LEASE AGREEMENT
THIS AGREEMENT is made as of the 5th day of January, 1999 
between:
(1)	AeroUSA, Inc., a company organized under the laws of the 
State of Connecticut with its principal place of business 
at Lee Farm Corporate Park, 83 Wooster Heights Road, 
Danbury, CT 06810 ("Lessor"); and
(2)	Vanguard Airlines, Inc., a corporation organized under the 
laws of the State of Delaware with its principal place of 
business at 533 Mexico City Avenue, Kansas City, Missouri  
64153 ("Lessee").
WHEREAS:  Lessor wishes to lease to Lessee and Lessee is 
willing to lease from Lessor the Aircraft on the terms of 
this Agreement. 
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS:
In this Agreement capitalized words and expressions have 
the respective meanings set forth in Schedules 1 and 10.
1.2 CONSTRUCTION:
(a) In this Agreement, unless the contrary intention is stated, 
a reference to:
(i) each of "Lessor" or "Lessee" or any other Person 
includes, without prejudice to the provisions of this 
Agreement restricting transfer or assignment, any 
successor and any assignee; 
(ii) words importing the plural shall include the singular 
and vice versa; 
(iii) any document shall include that document as 
amended, novated, assigned or supplemented; 
(iv) a Clause or a Schedule is a reference to a clause of 
or a schedule to this Agreement; 
<PAGE>
(v) any Law, or to any provision of any Law, is a 
reference to such Law or provision as amended, 
substituted or re-enacted; and
(b) headings are to be ignored in construing this Agreement. 
2. REPRESENTATIONS AND WARRANTIES
2.1 LESSEE'S REPRESENTATIONS AND WARRANTIES:  The 
representations and warranties set forth in Clauses 1.1 and 
1.2 of Schedule 2 are hereby made by Lessee to Lessor.
2.2 REPETITION: The representations and warranties in Clauses 
1.1 and 1.2 of Schedule 2 will survive the execution of 
this Agreement and will be deemed to be repeated by Lessee 
on the Delivery Date with reference to the facts and 
circumstances then existing.  The representations and 
warranties contained in Clause 1.1 of Schedule 2 will be 
deemed to be repeated by Lessee on each Rent Date as if 
made with reference to the facts and circumstances then 
existing (and for this purpose, the representation and 
warranty contained in Clause 1.1 (g) shall be construed by 
reference to the accounts most recently provided prior to 
such Rent Date).
2.3 LESSOR'S REPRESENTATIONS AND WARRANTIES: The 
representations and warranties set forth in Clause 1.3 of 
Schedule 2 are hereby made by Lessor to Lessee and will be 
deemed to be repeated by Lessor on the Delivery Date with 
reference to the facts and circumstances then existing.
3. CONDITIONS PRECEDENT
3.1 LESSEE CONDITIONS PRECEDENT:  Lessor's obligation to 
deliver and commence the leasing of the Aircraft under this 
Agreement is subject to satisfaction of each of the Lessee 
Conditions Precedent specified in Schedule 3.
3.2 WAIVER:  Lessee Conditions Precedent are for the sole 
benefit of Lessor and may be waived or deferred in whole or 
in part and with or without conditions by Lessor.  If any  
of Lessee Conditions Precedent are not satisfied on the 
Delivery Date and Lessor (in its absolute discretion) 
nonetheless agrees to deliver the Aircraft to Lessee and to 
commence the leasing of the Aircraft hereunder, Lessee will 
ensure that such Lessee Conditions Precedent are fulfilled 
within 15 days after the Delivery Date (unless waived or
<PAGE>
deferred in Lessor's absolute discretion), and Lessor may 
treat as an Event of Default the failure of Lessee to do 
so. 
3.3 LESSOR CONDITIONS PRECEDENT:  Lessee's obligation to accept 
delivery and commence the leasing of the Aircraft under 
this Agreement is subject to satisfaction of each of the 
Lessor Conditions Precedent specified in Schedule 3.
3.4 WAIVER:  Lessor Conditions Precedent are for the sole 
benefit of Lessee and may be waived or deferred in whole or 
part and with or without conditions by Lessee.
4. COMMENCEMENT
4.1 LEASING:
(a) On the Delivery Date, Lessor will lease the Aircraft to 
Lessee and Lessee will take delivery of the Aircraft on 
lease in accordance with this Agreement for the duration of 
the Term.  Subject to Clause 4.3, Lessor will deliver and 
Lessee will accept the Aircraft on the Scheduled Delivery 
Date or such other day as may be agreed in writing by the 
parties at which time the leasing of the Aircraft pursuant 
to the terms of this Agreement shall commence. 
(b) If (i) Lessee is unwilling or unable to accept delivery of 
the Aircraft on the Rent Commencement Date, or Lessee fails 
to fulfill any Lessee Condition Precedent on or before such 
date, and (ii) the Aircraft meets the Delivery Condition 
Requirements, then Lessee's obligation to pay Rent 
hereunder shall commence on the Rent Commencement Date 
notwithstanding that Lessee has not accepted possession of 
the Aircraft and the leasing of the Aircraft has not 
commenced.  
(c) After Delivery, the Aircraft, the Engines and every Part 
will be in every respect at the sole risk of Lessee, who 
will bear all risk of loss, theft, damage or destruction to 
the Aircraft, any Engine or any Part from any cause 
whatsoever. 
4.2 DELIVERY:  Subject to Clause 4.5, the Aircraft will be 
delivered to and accepted by Lessee at the Delivery 
Location or such other location as may be agreed in an "as
<PAGE>
is, where is" condition. Lessee will accept delivery of the 
Aircraft at the Delivery Location or such other location as 
may be agreed subject to the Aircraft meeting the Delivery 
Condition Requirements. Without prejudice to Clauses 3.1, 
4.1 and 4.5, Lessee will effect acceptance of the condition 
of the Aircraft by execution and delivery to Lessor of the 
Certificate of Technical Acceptance and possession of the 
Aircraft shall pass from Lessor to Lessee upon execution 
and delivery by Lessor of the Lease Supplement.  Lessee's 
acceptance of the Aircraft shall be regarded for all 
purposes as absolute, unconditional and irrevocable; 
provided , however, discrepancies specifically referred to 
in the Certificate of Technical Acceptance shall be 
corrected as agreed by Lessor and Lessee as set forth 
therein.
4.3 DELAYED DELIVERY: If owing to: 
(a) the existing lessee of the Aircraft delaying in the 
delivery of, or failing to deliver, the Aircraft to Lessor 
for any reason (other than because of any default of Lessor 
in the performance of its obligations under an agreement 
with that lessee unless the default arises from any act or 
omission of Lessee) whether or not in circumstances 
entitling that lessee to terminate that agreement; 
(b) any Excusable Delay; or 
(c) notification of any defect or non-conformity pursuant to 
Clause 4.5;
Lessor delays in the delivery of, or fails to deliver, the 
Aircraft under this Agreement, then in any such case: 
(i) Lessor will not be responsible for any losses, 
including loss of profit, costs or expenses arising 
from or in connection with the delay or failure 
suffered or incurred by Lessee; 
(ii) subject to Clause 4.5, Lessee will not be entitled to 
terminate this Agreement or to reject the Aircraft 
when tendered for delivery by Lessor, on the grounds 
of any such delay except as provided below; and
<PAGE>
(iii) upon any such termination or termination pursuant 
to Clause 4.5 neither Lessor nor Lessee will have any 
further obligation to the other under this Agreement 
other than as expressly set out in this Agreement, 
except that Lessor will repay to Lessee the Deposit, 
including any interest earned thereon. 
In the event that Lessor fails to deliver the Aircraft in 
accordance with this Agreement on or before June 30, 1999, 
Lessee will be entitled to terminate this Agreement on the 
grounds of such delay and the provisions of clause (iii) 
above shall apply.
4.4 LICENSES: Lessee will at its expense obtain all licenses, 
permits and approvals which may be necessary to export 
and/or transport the Aircraft from the Delivery Location. 
Lessor will furnish such data and information as may be 
reasonably requested by Lessee in connection with obtaining 
any such license, permit or approval. 
4.5 INSPECTION: Prior to the Delivery Date, subject to any 
applicable purchase or lease agreement, Lessor will give 
Lessee a reasonable opportunity:
(a) to inspect the Aircraft at the Delivery Location (or at 
another location agreed to by Lessor and Lessee); and 
(b) to assign up to two representatives to participate as 
observers in a two-hour demonstration flight.  If Lessee 
notifies Lessor promptly prior to the Delivery Date of any 
defect or non-conformity with the Delivery Condition 
Requirements observed during the inspection or 
demonstration flight, Lessor, at its sole cost and expense, 
will correct or procure the correction of the defect or 
non-conformity as promptly as practicable (except to the 
extent otherwise agreed or to the extent in the reasonable 
opinion of Lessor it is impracticable or prohibitively 
expensive to do so).  Subject to Clause 4.3, Lessor may, by 
notice to Lessee, postpone the Delivery Date in such a case 
to the date on which Lessor notifies Lessee that the defect 
or non-conformity has been rectified (the "Extended 
Delivery Date"). Lessor shall notify Lessee of the Extended 
Delivery Date as soon as possible following notification by 
Lessee of the defect or nonconformity with the Delivery 
Condition Requirements and the Extended Delivery Date shall 
be a date not later than June 30, 1999.  Upon receipt of 
such notice by Lessee, the Extended Delivery Date shall be 
the Scheduled Delivery Date for all purposes hereunder.
<PAGE>
Lessor or Lessee will be entitled to terminate this 
Agreement if Lessor notifies Lessee that Lessor does not 
intend to correct the defect or non-conformity.  If this 
Agreement is not terminated and Lessor corrects or procures 
the correction of any such defect or non-conformity, Lessor 
shall make the Aircraft available for reinspection by 
Lessee and will conduct such further inspection flight as 
may be necessary to verify compliance with the Delivery 
Condition Requirements.  Upon completion of such inspection 
or reinspection, Lessor shall tender the Aircraft for 
Delivery and, provided that the Delivery Condition 
Requirements are then satisfied, Lessee shall effect 
acceptance of the Aircraft in the manner and with the 
effect specified in Clause 4.2.
4.6 INDEMNITY:  Lessee will indemnify and hold harmless each 
Indemnitee on an After-Tax Basis from and against all 
Losses arising from death or injury to any observer or any 
employee of Lessee in connection with any demonstration 
flight or inspection of the Aircraft by Lessee. 
5. PAYMENTS
5.1 DEPOSIT: Lessee shall pay to Lessor a Deposit in the amount 
set forth in Clause 2 of Schedule 10 in accordance with the 
schedule set forth in that Clause. Such deposit shall be 
maintained by Lessor in a separate, interest bearing 
account.
5.2 RENTAL PERIODS:  The first Rental Period will commence on 
the Rent Commencement Date and each subsequent Rental 
Period will commence on the date succeeding the last day of 
the previous Rental Period.  Each Rental Period will end on 
the date immediately preceding the numerically 
corresponding day in the next month, except that: 
(a) if there is no such numerically corresponding day in that 
month, it will end on the last day of that month; and
(b) if a Rental Period would otherwise overrun the Expiry Date, 
it will end on the Expiry Date.
5.3 RENT: Lessee will pay to Lessor or its order on each Rent 
Date Rent in advance in the amount specified as "Rent" in 
Clause 2 of Schedule 10; provided, that Lessor hereby 
<PAGE>
agrees to waive Lessee's payment of Rent for (i) the first 
Rental Period which would otherwise be due and payable on 
the Rent Commencement Date, plus (ii) the first eight days 
of Rent for the second Rental Period, provided further, 
that Lessee will pay Rent for the second Rental Period on 
the day that is eight days after the Rent Date for such 
period.  Payment must be initiated adequately in advance of 
the Rent Date to ensure that Lessor receives credit for the 
payment on the Rent Date.  If a Rental Period begins on a 
day which is not a Business Day, the Rent payable in 
respect of that Rental Period shall be paid on the Business 
Day immediately following such day. In the event that any 
Rent is due for a period which is less than a whole Rental 
Period, the Rent paid will be prorated on the basis of a 
per diem amount determined by dividing the amount of the 
Rent by 30 days.
5.4 SUPPLEMENTAL RENT: 
(a) AMOUNT: Lessee will further pay to Lessor Supplemental Rent 
in relation to each calendar month (or part thereof) 
(including without limitation the last calendar month, or 
part thereof, of the Term) on the fourteenth day following 
the end of such calendar month, in the amounts specified in 
Clause 4 of Schedule 10, except that the last payment of 
Supplemental Rent during the Term shall be paid on the 
Expiry Date.
(b) ADJUSTMENT: The amount of Supplemental Rent shall be 
adjusted after the Delivery Date not more frequently than 
annually (with any such adjustment having retrospective 
application as appropriate to reflect (ii) below) based on 
the following:
(i) by application of the Escalation Adjustment set forth 
in Clause 2 of Schedule 10; and
(ii) by reference to Clause 3 of Schedule 10 in respect of 
any change in the hour to cycle ratio of the operation 
of the Aircraft and/or any material revision of the 
Lessee's Maintenance Program. 
5.5 PAYMENTS: All payments by Lessee to Lessor under this 
Agreement will be made for value on the due date in Dollars 
and in immediately available funds settled through the New 
<PAGE>
York Clearing House System or such other funds as may for 
the time being be customary for the settlement in New York 
City of payments in Dollars by wire transfer to Bankers 
Trust Company, 4 Albany Street, New York, New York 10006, 
ABA No.: 021-001-033, for the account of BTCo. as Trustee 
for Airplanes Pass-Through Trust-Rental 1, account number 
00325067 or to such other account as Lessor may advise 
Lessee in writing.
5.6 WITHHOLDING: 
(a) All payments by Lessee pursuant to this Agreement shall be 
free of all withholdings of any nature whatsoever except to 
the extent otherwise required by Law, and if any such 
withholding is so required, Lessee shall pay an additional 
amount such that after the deduction of all amounts 
required to be withheld, the net amount actually received 
by Lessor will equal the amount that Lessor would have 
received if such withholding had not been required; 
provided, however, that nothing in this Section 5.6(a) 
shall obligate Lessee to pay any such additional amount to 
compensate for the withholding of any Lessor Tax or any 
other Tax for which Lessee is not obligated to indemnify 
Lessor pursuant to Schedule 11 hereof.
(b) If any payment is made by Lessee under Clause 5.6(a) and 
Lessor in good faith determines that it has actually 
received a credit or deduction against, or relief or 
remission for, or repayment of, any Tax paid or payable by 
Lessor in respect of or calculated with reference to the 
deduction or withholding giving rise to such payment, 
Lessor shall, to the extent that it can do so without 
prejudice to the retention of the amount of such credit, 
deduction, relief, remission or repayment and without 
leaving Lessor in any worse position than that in which it 
would have been had such deduction or withholding not been 
required to be made, pay to Lessee such amount as Lessor 
shall in good faith have determined to be attributable to 
the relevant deduction or withholding.
Nothing in this Clause 5.6(b) shall:
(i) interfere with the right of Lessor to arrange its tax 
affairs in whatever manner it thinks fit and, in 
particular, but without limitation, Lessor shall not 
<PAGE>
be under any obligation to claim credit, relief, 
remission or repayment from or against its corporate 
profits or similar Tax liability in respect of the 
amount of any such deduction or withholding in 
priority to any other claims, reliefs, credits or 
deductions available to Lessor; or
(ii) oblige Lessor to disclose any information relating to 
its Tax affairs or any computations in respect 
thereof.
5.7 TAXES AND OTHER OUTGOINGS: Lessee will promptly pay:
(a) all license and registration fees, Taxes (other than Lessor 
Taxes) and other amounts of any nature imposed by any 
Government Entity with respect to the Aircraft and/or this 
Agreement, including without limitation the ownership, 
delivery, leasing, possession, use, operation, return, sale 
or other disposition of the Aircraft; and 
(b) all rent, fees, charges, Taxes (other than Lessor Taxes) 
and other amounts in respect of any premises where the 
Aircraft, any Engine or any Part is located from time to 
time; 
except to the extent that, in the reasonable opinion of 
Lessor, such payment is being contested in good faith by 
appropriate proceedings, in respect of which adequate 
reserves have been provided by Lessee and non-payment of 
which does not give rise to any material likelihood of the 
Aircraft or any interest therein being sold, forfeited or 
otherwise lost or of criminal liability on the part of 
Lessor or Owner. 
5.8 TAX INDEMNITY: 
Lessee will pay and indemnify each Tax Indemnitee against 
all Taxes (other than Lessor Taxes) as specified in 
Schedule 11.
5.9 LESSOR OBLIGATIONS FOLLOWING EXPIRY DATE: Within five 
Business Days after:
(a) redelivery of the Aircraft to Lessor in accordance with and 
in the condition required by this Agreement; or 
<PAGE>
(b) payment to Lessor of the Agreed Value following an Event of 
Loss after the Delivery Date; 
or in each case such later time as Lessor is satisfied that 
Lessee has irrevocably paid to Lessor all amounts which may 
then be outstanding or become payable under this Agreement 
and the Other Agreements, Lessor will pay to Lessee:
(i) the balance of the Deposit, including any interest 
earned thereon; and
(ii) the amount of any Rent received in respect of any 
period falling after the date of redelivery of the 
Aircraft or payment of the Agreed Value, as the case 
may be.
5.10 NET LEASE: This Agreement is a net lease. Lessee's 
obligations under this Agreement are absolute and 
unconditional irrespective of any circumstance or 
contingency whatsoever and shall not be reduced by any 
circumstance or contingency whatsoever, including (but not 
limited to):
(a) any right of set-off, counterclaim, recoupment, defense or 
other right which either party to this Agreement may have 
against the other (including any right of reimbursement) or 
which Lessee may have against the Manufacturer, any 
manufacturer or seller of or any Person providing services 
with respect to the Aircraft, any Engine or any Part or any 
other Person, for any reason whatsoever; 
(b) any unavailability of the Aircraft for any reason, 
including, but not limited to, a requisition of the 
Aircraft or any prohibition or interruption of or 
interference with or other restriction against Lessee's 
use, operation or possession of the Aircraft (whether or 
not the same would, but for this provision, result in the 
termination of this Agreement by operation of law); 
(c) any lack or invalidity of title or any other defect in 
title, airworthiness, merchantability, fitness for any 
purpose, condition, design, or operation of any kind or 
nature of the Aircraft for any particular use or trade, or 
for registration or documentation under the Laws of any 
relevant jurisdiction, or any Event of Loss in respect of 
or any damage to the Aircraft;
<PAGE>
(d) any insolvency, bankruptcy, reorganization, arrangement, 
readjustment of debt, dissolution, liquidation or similar 
proceedings by or against Lessor, Lessee or any other 
Person; 
(e) any invalidity or unenforceability or lack of due 
authorization of, or other defect in, this Agreement;
(f) any Security Interests or Taxes; and/or
(g) any other cause or circumstance which but for this 
provision would or might otherwise have the effect of 
terminating or in any way affecting any obligation of 
Lessee under this Agreement.
Lessee hereby waives, to the extent permitted by applicable 
Law, any and all rights which it may now have or which at 
any time hereafter may be conferred upon it, by Law or 
otherwise, to terminate, cancel, quit or surrender this 
Agreement or any obligation imposed upon Lessee hereunder 
or in relation hereto except as expressly provided in this 
Agreement.
Nothing in this Clause 5.10 will be construed to limit 
Lessee's rights and remedies in the event of Lessor's 
breach of Clause 7.1 or to limit Lessee's rights and 
remedies to pursue in a court of law any claim it may have 
against Lessor or any other Person. 
5.11 FURTHER PROVISIONS REGARDING DEPOSIT:
(a) Lessee agrees that Lessor will not hold any such funds as 
agent or on trust for Lessee or in any similar fiduciary 
capacity.
(b) If Lessee fails to comply with any provision of this 
Agreement or the Other Agreements, or any Default shall 
have occurred and be continuing, in addition to all rights 
and remedies accorded to Lessor elsewhere in this Agreement 
or under Law in respect of the Deposit, Lessor may 
immediately or at any time thereafter, without prior notice 
to Lessee, apply all or part of the Deposit in or towards 
the payment or discharge of any matured obligation owed by 
Lessee or any affiliate of Lessee under this Agreement or 
<PAGE>
the Other Agreements, in such order as Lessor sees fit, 
and/or exercise any of the rights of set-off described in 
Clause 5.18 against all or part of the Deposit.
(c) If Lessor exercises the rights described in sub-clause (b) 
above, Lessee shall, following a demand in writing from 
Lessor, immediately restore the Deposit to the level at 
which they stood immediately prior to such exercise.  
5.12 LETTER OF CREDIT:
(a) In lieu of paying the Deposit in accordance with Clause 
5.1, at the time such the Deposit (or part thereof) is 
required to be paid under this Agreement, at any time or 
from time to time, as the case may be, Lessee will provide 
Lessor with an irrevocable and unconditional Letter of 
Credit in the amount of the LC Amount, issued and payable 
by a bank acceptable to Lessor and in form and substance 
acceptable to Lessor and, if Lessor requests, confirmed by 
the London or New York branch of a major international bank 
acceptable to Lessor from time to time, as security for all 
payment obligations of Lessee to Lessor under this 
Agreement (including damages), which shall remain in full 
force and effect and may be drawn down by Lessor upon 
demand at any time or times until the Required LC Expiry 
Date.  Upon receipt of the Letter of Credit in accordance 
with this Clause 5.12(a), Lessor will refund the Deposit 
and any interest thereon to Lessee.
(b) With the prior written consent of Lessor, the Letter of 
Credit may have a validity period or periods ending prior 
to the Required LC Expiry Date, provided that (i) the 
Letter of Credit shall, in each case, be renewed and 
delivered to Lessor not later than 30 Business Days prior 
to its expiry; and (ii) a Letter of Credit shall remain in 
force at all times up to the Required LC Expiry Date.
(c) If at any time during the Term Lessor determines that the 
current issuing or confirming bank for the Letter of Credit 
is no longer an acceptable issuing or confirming bank 
(whether by virtue of a material adverse change in its 
financial condition or for any other reason) Lessee shall 
promptly procure that the Letter of Credit is replaced by a 
Letter of Credit issued by another bank acceptable to 
Lessor and (if appropriate) that such replacement Letter of 
Credit is confirmed by another bank acceptable to Lessor.
<PAGE>
(d) If Lessor makes a drawing under the Letter of Credit, 
Lessee shall, following a demand in writing by Lessor, 
immediately procure that the maximum amount available for 
drawing under the Letter of Credit is restored to the level 
at which it stood immediately prior to such drawing.
5.13 RESERVED
5.14 LATE PAYMENT INTEREST:  If Lessee fails to pay any amount 
payable under this Agreement within 2 days after the date 
due, Lessee will pay on demand from time to time to Lessor 
interest (both before and after judgment) on that amount, 
from the due date to the date of payment in full by Lessee 
to Lessor, at the Interest Rate.  All such interest will be 
compounded monthly and calculated on the basis of the 
actual number of days elapsed in the month, assuming a 30 
day month and a 365 day year.
5.15 CURRENCY: Lessee acknowledges that the specification of 
Dollars in this Agreement is of the essence and that 
Dollars shall be the currency of account in any and all 
events.  Lessee waives any right it may have in any 
jurisdiction to pay any amount under this Agreement in a 
currency other than Dollars. 
5.16 CERTIFICATES: Save where expressly provided in this 
Agreement, any certificate or determination by Lessor as to 
any rate of interest or as to any other amount payable 
under this Agreement will, in the absence of manifest 
error, be presumed prima facie to be correct. 
5.17 APPROPRIATION: If any sum paid or recovered by Lessor in 
respect of the liabilities of Lessee under this Agreement 
is less than the amount then due, Lessor may apply that sum 
to amounts due under this Agreement in such proportions and 
order and generally in such manner as Lessor may determine 
at its sole discretion.
5.18 SET-OFF:  If a Default has occurred and is continuing, 
Lessor may set off any matured obligation owed by Lessee or 
any affiliate of Lessee (to the extent beneficially owned 
by Lessor) under this Agreement or the Other Agreements 
against any obligation (whether or not matured) owed by 
Lessor to Lessee, regardless of the place of payment or 
currency. If the obligations are in different currencies, 
Lessor may convert either obligation at the market rate of 
exchange available in New York or at its option London for 
<PAGE>
the purpose of the set-off.  If an obligation is 
unascertained or unliquidated, Lessor may in good faith 
estimate that obligation and set off in respect of the 
estimated amount, in which case when the obligation is 
ascertained or liquidated Lessor or Lessee shall make a 
payment to the other (as appropriate) in respect of any 
amount by which the ascertained or liquidated amount 
differs from the estimated amount. Lessor will not be 
obliged to pay any amounts to Lessee under this Agreement 
so long as any sums which are then due from Lessee or any 
affiliate of Lessee under this Agreement or the Other 
Agreements remain unpaid, and any such amounts which would 
otherwise be due will fall due only if and when Lessee has 
paid all such sums, except to the extent Lessor otherwise 
agrees or sets off such amounts against such payment 
pursuant to the foregoing provisions.  Lessor shall provide 
Lessee with prompt written notice of the exercise of its 
right of set-off under this Clause 5.18.
5.19 EXPENSES: Whether or not the Aircraft is delivered to 
Lessee pursuant to this Agreement, Lessee will pay to 
Lessor on an After-Tax Basis on demand:
(a) all fees, costs and expenses (including legal, 
professional, and out-of-pocket expenses) payable or 
incurred by Lessor in connection with any amendment to or 
extension of or other documentation in connection with, or 
the granting of any waiver or consent under, this Agreement 
or the monitoring of compliance by Lessee with this 
Agreement (but excluding any fees, costs and expenses 
incurred by Lessor in connection with any change in the 
ownership or financing of the Aircraft); 
(b) all fees, costs and expenses (including legal, professional 
and out-of-pocket expenses) associated with perfecting this 
Agreement in the State of Registration, the State of 
Incorporation and the Habitual Base (and any other state or 
country as appropriate having regard to the operation of 
the Aircraft), including (but not limited to) legal 
opinions, tax advice, registrations and the payment of 
documentary Taxes and any other Taxes and fees, whether 
required by Lessor or Lessee; and
<PAGE>
(c) all fees, costs and expenses (including legal, professional 
and out-of-pocket expenses) payable or incurred by Lessor 
in contemplation of, or otherwise in connection with, the 
enforcement of or preservation of any of Lessor's rights 
under this Agreement, or in respect of the repossession of 
the Aircraft. 
All amounts payable pursuant to this Clause 5.19 will be 
paid in the currency in which they are incurred by Lessor.  
Lessor and Lessee shall each be responsible for their own 
legal costs associated with the negotiation and 
documentation of this transaction.
6. MANUFACTURER'S WARRANTIES
6.1 ASSIGNMENT:
(a) With effect from Delivery, Lessor assigns to Lessee, and 
authorizes Lessee to exercise, such rights as Lessor may 
have under any warranty with respect to the Aircraft, any 
Engine or any Part (including, without limitation, any 
warranty with respect to Year 2000 Compliance) made by any 
manufacturer, vendor, sub-contractor or supplier, to the 
extent that the same may be assigned or otherwise made 
available to Lessee.  
(b) Lessee shall give Lessor prompt written notice of any 
warranty claim which is settled with Lessee on the basis of 
a total or partial cash payment.  Any cash payments to 
Lessee in respect of warranty claims which are not applied 
to the repair or remedy of defects in the Aircraft or to 
the reimbursement of the out-of-pocket expenses actually 
incurred by Lessee in the collection of such cash payments, 
and which are not in respect of compensation for loss of 
use of the Aircraft, an Engine or Part during the Term due 
to a defect covered by such warranty, shall be for Lessor's 
account and shall be paid by Lessee to Lessor.  
(c) Upon occurrence of an Event of Default or termination or 
expiry of the leasing of the Aircraft under this Agreement 
(each a "Termination Event"), whichever occurs earlier, all 
rights under such warranties will immediately revert to 
Lessor, including all claims thereunder (whether or not 
perfected); and Lessee will immediately take all steps and 
execute all documents required by Lessor to perfect such 
reversion.
<PAGE>
6.2 PROCEEDS:  Lessee agrees to apply any proceeds of any 
claims assigned to Lessee by Lessor under Clause 6.1 to 
remedy the defect, if any, in the Aircraft, any Engine or 
any Part giving rise to such claim.  So long as no 
Termination Event has occurred and is continuing, Lessor 
agrees (subject to Clause 6.1(b)) to cooperate with Lessee 
to cause any proceeds from any rights assigned by Lessor to 
Lessee under Clause 6.1 to be paid directly to Lessee, and, 
if any such proceeds are nonetheless paid to Lessor, Lessor 
agrees to remit promptly such proceeds to Lessee.  However, 
upon a Termination Event, Lessor may immediately:
(a) retain for its own account any such proceeds previously 
paid to Lessor which would have been remitted to Lessee 
under this Clause 6.2 in the absence of such Termination 
Event; 
(b) cause any proceeds of any pending claims to be paid to 
Lessor, rather than to Lessee; and 
(c) recover from Lessee the proceeds of any such claims 
previously paid to Lessee to the extent that such claims 
relate to any defect in the Aircraft, any Engine or any 
Part not fully and completely rectified by Lessee before 
such Termination Event.
6.3 PARTS: Except to the extent Lessor otherwise agrees in a 
particular case, Lessee will procure that all engines, 
components, furnishings or equipment provided by the 
manufacturer, vendor, subcontractor or supplier in 
replacement of a defective Engine or Part pursuant to the 
terms of any warranty will be installed promptly by Lessee 
and that title thereto (free of Security Interests other 
than Permitted Liens) vests in Lessor.  On installation 
each such part will be deemed to be a Part.  In the case of 
a Replacement Engine, Lessee will satisfy and perform each 
of the conditions and covenants set forth in Clause 
11.1(d).
6.4 AGREEMENT: To the extent any warranties relating to the 
Aircraft are made available under an agreement between any 
manufacturer, vendor, subcontractor or supplier and Lessee, 
Lessee will:
(a) apply the proceeds of any claim under such agreement in 
accordance with Clause 6.2 and (pending such application) 
will hold the claim and the proceeds in trust for Lessor; 
and
<PAGE>
(b) take all such steps as are necessary at the end of the Term 
to ensure that the benefit of any of those warranties which 
have not expired is vested in Lessor.
7. LESSOR'S COVENANTS
7.1 QUIET ENJOYMENT:  Provided no Default has occurred and is 
continuing, Lessor will not interfere with the quiet use, 
possession and enjoyment of the Aircraft by Lessee during 
the Term; but the proper exercise by Lessor of its rights 
under or in connection with this Agreement will not 
constitute such an interference. THE FOREGOING COVENANT IS 
IN LIEU OF ANY RIGHT OF LESSEE UNDER SECTION 2A-211(1) OF 
THE NEW YORK UNIFORM COMMERCIAL CODE OR ANY SIMILAR LAW, 
WHICH RIGHT LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES 
AND LESSOR EXPRESSLY DISCLAIMS. 
7.2 LESSOR LIENS:  Lessor will promptly, at its own expense, 
take such action as may be necessary to discharge or 
satisfy (by bonding or otherwise) any Lessor Lien.  Nothing 
in this Clause 7 will be construed to limit Lessee's right 
to institute separate legal proceedings against Lessor in 
the event of Lessor's breach of this Agreement or to limit 
Lessee's rights and remedies against any other Person.
7.3 MAINTENANCE CONTRIBUTIONS:  Provided that no Default has 
occurred and is continuing, Lessor will pay to Lessee, by 
way of contribution to the cost of maintenance of the 
Aircraft, the amounts provided for, and on terms and 
conditions specified in Clause 5 of Schedule 10.
7.4 PAYMENT FOR CERTAIN COMPONENTS:
(a) Lessee will carry out modifications to the fuel indication 
system and procure any flight manual, and weight and 
balance manual changes, for which changes, following 
receipt by Lessor of an invoice for and evidence in form 
and substance reasonably acceptable to Lessor, and 
providing no Default has occurred and is continuing, Lessor 
will pay to Lessee the lesser of (i) the amount of the 
invoice and (ii) $60,000.00; provided that to the extent 
that Lessor pays to Lessee an amount less than $60,000 
pursuant to this Clause 7.4(a), the Modification Amount (as 
defined on Schedule 10) shall be reduced in accordance with 
Clause 7 of Schedule 10 only by the amount actually paid by 
Lessor to Lessee hereunder.
<PAGE>
(b) Lessor will provide for installation on the Aircraft by 
Lessee or its designee, Nordam LGW Hush Kits, TCAS II 
computer control head and antennas, and a Windshear systems 
GPWS computer.
Lessee will provide any engineering and applicable modification 
kits required for the installation of the TCAS II, Windshear, 
and fuel indication system modifications.
8. LESSEE'S COVENANTS
8.1 DURATION:
(a) Lessee shall perform and comply with its undertakings and 
covenants in this Agreement at all times during the Term.  
All such undertakings and covenants shall, except where 
expressly otherwise stated, be performed at the expense of 
Lessee.
(b) Lessee will procure that no Person (other than Lessor) will 
act in any manner inconsistent with Lessee's obligations 
under this Agreement. 
8.2 INFORMATION: Lessee will:
(a) notify Lessor forthwith of the occurrence of any Default or 
any other event which might adversely affect Lessee's 
ability to perform any of its obligations under this 
Agreement; 
(b) furnish to Lessor:
(i) upon request, as soon as available but not, in any 
event, sooner than 45 days after the last day of each 
financial quarter of Lessee, the consolidated 
management accounts of Lessee (in Dollars and 
comprising a balance sheet and profit and loss 
statement) prepared for the most recent previous 
financial quarter certified by a qualified financial 
officer of Lessee as being true and correct;
<PAGE>
(ii) as soon as available but not in any event later than 
120 days after the last day of each financial year of 
Lessee, its audited consolidated balance sheet as of 
such day and its audited consolidated profit and loss 
statement for the year ending on such day (each in 
Dollars); 
(iii) a copy of each notice or circular issued to 
Lessee's shareholders or creditors as a group at the 
time so issued; and 
(iv) such other information and documents regarding Lessee 
and its business and affairs as Lessor may reasonably 
request from time to time, including without 
limitation any information or documents necessary to 
enable Lessor to comply with its tax filing, audit and 
litigation obligations;
(c) promptly furnish to Lessor all information Lessor from time 
to time reasonably requests regarding the Aircraft, each 
Engine, any engine installed on the Airframe, and any Part, 
and the use, location and condition of the Aircraft, 
including, without limitation, the hours remaining on the 
Aircraft and any Engine until the next scheduled check, 
inspection, overhaul or shop visit, as the case may be; 
(d) on request, within 10 days after the end of any Rental 
Period, furnish to Lessor evidence satisfactory to Lessor 
of payment of all Taxes due during that or any previous 
Rental Period that could reasonably be expected to effect 
Lessor's interest in this Agreement or the Aircraft; 
(e) on request, furnish to Lessor evidence satisfactory to 
Lessor that all Taxes, charges and other outgoings incurred 
by Lessee with respect to the Aircraft, including without 
limitation all payments due to the relevant air traffic 
control authorities, have been paid and discharged in full; 
(f) provide to Lessor within 10 days after the end of each 
calendar month a monthly report on the Aircraft and each 
Engine in the form required by Lessor; 
(g) give Lessor not less than 45 days' written notice as to the 
time and location of all Major Checks; and
(h) promptly notify Lessor of:
<PAGE>
(i) any loss, theft, damage or destruction to the 
Aircraft, any Engine or any Part, or any modification 
to the Aircraft if the potential cost may exceed the 
Damage Notification Threshold; and 
(ii) any claim or other occurrence likely to give rise to a 
claim under the Insurances (but in the case of hull 
claims, only for any claim in excess of the Damage 
Notification Threshold) and details of any 
negotiations with the insurance brokers over any such 
claim. 
8.3 LAWFUL AND SAFE OPERATION: Lessee will:
(a) not take, or fail to take, any action, in respect of the 
operation and maintenance of the Aircraft, if the effect of 
such conduct by Lessee would be to cause Lessor, Owner, 
GECAS or Lessee to be in violation of any Law in force in 
any country or jurisdiction which may then be applicable 
(including, without limitation, Laws mandating insurance 
coverage); 
(b) not use the Aircraft in any manner contrary to (i) any 
recommendation of the manufacturers of the Aircraft, any 
Engine or any Part or (ii) any recommendation or regulation 
of the Air Authority or for any purpose for which the 
Aircraft is not designed or reasonably suitable; 
(c) ensure that the crew and engineers employed by it in 
connection with the operation and maintenance of the 
Aircraft have the qualifications and hold the licenses 
required by the Air Authority and applicable Law; 
(d) use the Aircraft solely in commercial or other operations 
for which Lessee is duly authorized by the Air Authority 
and under applicable Law; 
(e) not use the Aircraft for the carriage of any goods, 
materials, livestock or items of cargo which could 
reasonably be expected to cause damage to the Aircraft or 
which would not be adequately covered by the Insurances, or 
any item or substance whose possession or carriage is 
illegal under any applicable Law; and comply with any 
carriage regulations or restrictions from time to time 
issued by IATA;
<PAGE>
(f) not utilize the Aircraft for purposes of training, 
qualifying or re-confirming the status of cockpit personnel 
except for the benefit of Lessee's cockpit personnel, and 
then only if the use of the Aircraft for such purpose is 
not disproportionate to the use for such purpose of other 
aircraft of the same type operated by Lessee; 
(g) not cause or permit the Aircraft to proceed to, or remain 
at, any location that is prohibited or not permitted  
under:
(i) any Law or government regulation applicable to the 
Aircraft or to Lessee; or
(ii) any requirement of a Government Entity of the State of 
Registration or the Habitual Base; or 
(iii) any requirement of a Government Entity of the 
country in which such location is situated.
(h) obtain and maintain in full force all certificates, 
licenses, permits and authorizations from time to time 
required for the use and operation of the Aircraft, and for 
the making of payments required by, and the compliance by 
Lessee with its other obligations under, this Agreement; 
and 
(i) not use, operate, or locate the Aircraft or suffer or 
permit the Aircraft to be used, operated or located during 
the Term in any manner not covered by the Insurances or in 
any area excluded from coverage by the Insurances or in any 
manner which would prejudice the interests of the 
Indemnitees in the Insurances, the Aircraft, any Engine or 
any Part.
8.4 SUBLEASING:  LESSEE WILL NOT, WITHOUT THE PRIOR WRITTEN 
CONSENT OF LESSOR, SUBLEASE, WET-LEASE OR OTHERWISE PART 
WITH POSSESSION OF THE AIRCRAFT, THE ENGINES OR ANY PART, 
SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD, EXCEPT THAT 
LESSEE MAY PART WITH POSSESSION (A) WITH RESPECT TO THE 
AIRCRAFT, THE ENGINES OR ANY PART TO THE RELEVANT 
MANUFACTURERS FOR TESTING OR SIMILAR PURPOSES OR TO THE 
<PAGE>
AGREED MAINTENANCE PERFORMER FOR SERVICE, REPAIR, 
MAINTENANCE OR OVERHAUL WORK, OR ALTERATIONS, MODIFICATIONS 
OR ADDITIONS TO THE EXTENT REQUIRED OR PERMITTED BY THIS 
AGREEMENT, AND (B) WITH RESPECT TO AN ENGINE OR PART, AS 
EXPRESSLY PERMITTED BY THIS AGREEMENT. 
8.5 INSPECTION: 
(a) Lessor and any person designated by Lessor may at any time 
visit, inspect and survey the Aircraft, any Engine, any 
Part or the Aircraft Documents and for such purpose may, 
subject to any applicable Air Authority regulation, travel 
on the flight deck as observer.
(b) Such visits, inspections or surveys shall be at the sole 
cost and expense of Lessor, provided, however, Lessee will 
pay to Lessor on an After-Tax Basis on demand all 
reasonable out-of-pocket expenses incurred by Lessor in 
connection with any such visit, inspection or survey 
conducted after the occurrence of a Default.
(c) Lessor will:
(i) have no duty to make, and no liability arising out of 
making or failing to make, any such visit, inspection 
or survey; 
(ii) so long as no Default has occurred and is continuing, 
not exercise such right other than on reasonable 
notice and so as not to disrupt unreasonably the 
commercial operations of Lessee, provided, however, 
Lessee will take such action as may be reasonably 
required to facilitate Lessor's inspection; and 
(iii) indemnify and hold harmless Lessee from and 
against all Losses arising from death or injury to any 
such observer or any employee of Lessor in connection 
with any such visit, inspection or survey except to 
the extent such Losses arise from the gross negligence 
or willful misconduct of Lessee or its agents or 
employees.
8.6 OWNERSHIP; PROPERTY INTERESTS; RELATED MATTERS: Lessee 
will:
(a) not do or knowingly permit to be done or omit or knowingly 
permit to be omitted to be done any act or thing which 
might reasonably be expected to jeopardize the rights of 
Owner or Lessor as owner or lessor respectively of the 
Aircraft or as an additional insured or loss payee under 
the Insurances;
<PAGE>
(b) on all occasions when the ownership of the Aircraft, any 
Engine or any Part is relevant, make clear to third parties 
that title is held by Owner; 
(c) not at any time (i) represent or hold out Lessor or Owner 
as carrying goods or passengers on the Aircraft or as being 
in any way connected or associated with any operation or 
carriage (whether for hire or reward or gratuitously) which 
may be undertaken by Lessee; or (ii) pledge the credit of 
Lessor or Owner; 
(d) ensure that there is always affixed, and not removed or in 
any way obscured, a fireproof plate (having dimensions of 
not less than 10 cm. x 7 cm.) in a reasonably prominent 
position in the cockpit of the Aircraft adjacent to the 
certificate of airworthiness and on each Engine stating:
"This Aircraft/Engine is owned by Emerald Aviation 
Investments Limited and is leased to AeroUSA, Inc. and is 
subleased to Vanguard Airlines, Inc. and may not be or 
remain in the possession of, or be operated by any other 
person without the prior written consent of AeroUSA, Inc."; 
(e) not create or permit to exist any Security Interest (other 
than Permitted Liens) upon the Aircraft, any Engine or any 
Part; 
(f) not do or permit to be done anything which may reasonably 
be expected to expose the Aircraft, any Engine or any Part 
to penalty, forfeiture, impounding, detention, 
appropriation, damage or destruction and without prejudice 
to the foregoing, if any such penalty, forfeiture, 
impounding, detention or appropriation, damage or 
destruction occurs, give Lessor immediate notice thereof 
and procure the immediate release of the Aircraft, any 
Engine or the Part, as the case may be; 
(g) not abandon the Aircraft, any Engine or any Part; 
(h) pay and discharge, or cause to be paid and discharged, when 
due and payable or make adequate provision by way of 
security or otherwise for all debts, damages, claims and 
liabilities which have given or might give rise to a 
Security Interest (other than Permitted Liens) over or 
affecting the Aircraft, any Engine or any Part; and
<PAGE>
(i) not attempt, or hold itself out as having any power, to 
sell, lease or otherwise dispose of the Aircraft, any 
Engine or any Part.
8.7 GENERAL: Lessee will:
(a) will preserve its corporate existence (other than in 
connection with a solvent reorganization on terms which 
shall have previously been approved in writing by Lessor), 
and will conduct its business in an orderly and efficient 
manner and will maintain all rights, privileges, licenses 
and franchises material thereto or material to performing 
its obligations under this Agreement; 
(b) ensure that the Habitual Base remains the habitual base of 
the Aircraft unless Lessor gives its prior written consent 
to a change therein;
(c) not operate, maintain, insure or deal with the Aircraft or 
any Engine or Part in a manner which materially 
discriminates against the Aircraft or such Engine or Part, 
when compared with the manner in which Lessee operates, 
maintains, insures or deals with similar aircraft, engines 
or parts in Lessee's fleet;
(d) not, without giving Lessor 10 days prior notice (in 
accordance with this Agreement), change its chief executive 
office (as such term is defined in Article 9 of the Uniform 
Commercial Code as in effect in the State of Kansas) from 
533 Mexico City Avenue, Kansas City, Missouri  64153;
(e) remain a Certificated Air Carrier and maintain, without 
limitation, its status so as to fall within the purview of 
Section 1110 of Title 11 of the United States Code or any 
analogous statute; and
(f) remain a "citizen of the United States" as defined in 
Section 40102 of Title 49 of the United States Code. 
8.8 RECORDS: Lessee will:
(a) cause accurate, complete and current records as required by 
FAR 91.417 to be kept of all flights made by, and all 
maintenance carried out on, the Aircraft (including in 
relation to each Engine and Part subsequently installed, 
before the installation); keep the records in such manner 
as the Air Authority may from time to time require, and
<PAGE>
ensure that they comply with the mandatory recommendations 
of any manufacturers of the Aircraft, any Engine or any 
Part.  At redelivery the records required by FAR 91.417 
must be in English.  The records will form part of the 
Aircraft Documents; and
(b) maintain in English with appropriate revision service, all 
Aircraft Documents, records, logs, and other materials 
required by applicable Laws or the Air Authority in respect 
of the Aircraft. 
8.9 PROTECTION: Lessee will:
(a) maintain the registration of the Aircraft with the Air 
Authority in the name of Owner and not do or suffer to be 
done anything which might adversely affect that 
registration; and
(b) do all acts and things (including, without limitation, 
making any filing or registration with the Air Authority or 
any other Government Entity or as required to comply with 
the Geneva Convention where applicable) and execute and 
deliver, notarize, file, register and record all documents 
(including, without limitation, any amendment of this 
Agreement) as may be required by Lessor:
(i) upon or following any change or proposed change in the 
ownership or financing of the Aircraft (and Lessor 
shall reimburse Lessee for the reasonable out-of-
pocket expenses, including legal fees, incurred by 
Lessee at the time of such change in complying with 
Lessor's requirements under this paragraph (i)); or 
(ii) following any modification of the Aircraft, any Engine 
or any Part or the permanent replacement of any 
Engine, or Part in accordance with this Agreement, so 
as to ensure that the rights of Owner as owner of the 
Aircraft and under this Agreement apply with the same 
effect as before; or
(iii) to establish, maintain, preserve, perfect and 
protect the rights of Lessor under this Agreement and 
the interests of Owner as owner of the Aircraft. 
<PAGE>
8.10 MAINTENANCE AND REPAIR: Lessee will:
(a) keep the Aircraft airworthy in all respects and in good 
repair and condition; 
(b) not change, subsequent to the date on which this Agreement 
is signed by Lessee, the Lessee's Maintenance Program or 
the Maintenance Performer without providing prior written 
notice of such change to Lessor; provided, however, that 
Lessee may make changes to Lessee's Maintenance Program 
without notice insofar as, and only insofar as such changes 
effect procedures for line maintenance and/or Minor Checks.
(c) maintain the Aircraft in accordance with the Lessee's 
Maintenance Program through the Maintenance Performer; 
(d) maintain the Aircraft in accordance with the standard of 
maintenance required by FAR Part 121, Subpart L and any 
other rules and regulations of the FAA and in at least the 
same manner and with at least the same care, including, 
without limitation, maintenance scheduling, modification 
status and technical condition, as is the case with respect 
to similar aircraft owned or otherwise operated by Lessee 
and as if Lessee were to retain and continue operating the 
Aircraft in its fleet after the Expiry Date, including, 
without limitation, all maintenance to the Airframe, any 
Engine or any Part required to maintain all warranties, 
performance guaranties or service life policies in full 
force and effect; 
(e) comply with all Air Authority mandatory inspection and 
mandatory modification requirements, and Airworthiness 
Directives applicable to the Aircraft, any Engine or Part 
having a compliance date during the Term; 
(f) comply with all applicable Laws and the regulations of the 
Air Authority and other aviation authorities with 
jurisdiction over Lessee or the Aircraft, any Engine or 
Part (regardless of upon whom such requirements are 
imposed) and which relate to the maintenance, condition, 
use or operation of the Aircraft or require any 
modification or alteration to the Aircraft, any Engine or 
Part; 
(g) maintain in good standing a current certificate of 
airworthiness (in the appropriate category for the nature 
of the operations of the Aircraft) for the Aircraft issued 
<PAGE>
by the Air Authority except where the Aircraft is 
undergoing maintenance, modification or repair required or 
permitted by this Agreement, and Lessee will provide on 
request from time to time to Lessor a copy of such 
certificate; and 
(h) if required by the Air Authority, maintain a current 
certification as to maintenance issued by or on behalf of 
the Air Authority in respect of the Aircraft and will from 
time to time provide to Lessor a copy on request.
8.11 REMOVAL/INTERCHANGE OF ENGINES:  Lessee will:
(a) ensure that no Engine is removed from the Airframe unless 
it is promptly replaced by an engine of the same model as, 
or an improved or advanced version of or any Engine that 
meets the requirements of the flight manual limitations, 
such Engine and is in good operating condition;
(b) ensure that any Engine which is not installed on the 
Aircraft (or an aircraft permitted by paragraph (d) below) 
is, except as expressly permitted by this Agreement, 
properly and safely stored and insured, and kept free from 
Security Interests (other than Permitted Liens);
(c) from time to time, on request by Lessor, procure that any 
person to whom possession of an Engine is given 
acknowledges in writing to Lessor, in form and substance 
satisfactory to Lessor, that it will respect the interests 
of Owner and Lessor as owner and lessor respectively of 
such Engine and will not seek to exercise any rights 
whatsoever in relation to such Engine; and
(d) be permitted, if no Default has occurred and is continuing, 
to install any Engine on an aircraft operated by Lessee, 
provided that neither (i) the provisions of any applicable 
Law nor (ii) the terms of any lease or other agreement or 
Security Interest to which such aircraft or engine is 
subject, prohibit such installation or will have the effect 
at any time of divesting or impairing the title and 
interests of Owner and Lessor as owner and lessor 
respectively of such Engine.
<PAGE>
8.12 REMOVAL/INTERCHANGE OF PARTS:  Lessee will:
(a) ensure that no Part is at any time removed from the 
Aircraft unless it is promptly replaced by a part complying 
with the following:
(i) it is in as good operating condition, has 
substantially similar hours available until the next 
scheduled check, inspection, overhaul and shop visit, 
is of the same or a more advanced make and model and 
is of the same interchangeable modification status, 
and of equivalent value and utility to, as the 
replaced Part;
(ii) it has become and remains the property of Owner free 
from Security Interests (other than Permitted Liens) 
and on installation on the Aircraft will without 
further act be subject to this Agreement; and
(iii) Lessee has full details as to such part's source 
and maintenance records;
(b) ensure that any Part which is not installed on the Aircraft 
(or any other aircraft as expressly permitted by this 
Agreement) is properly and safely stored and insured, and 
kept free from Security Interests (other than Permitted 
Liens);
(c) be permitted, if no Default has occurred and is continuing, 
to install any Part on an aircraft operated by Lessee, 
provided that Clause 8.11(d) would be complied with in 
respect of such Part if it were an Engine; and
(d) promptly procure the replacement of any Part which has 
become time-, cycle- or calendar-expired, lost, stolen, 
seized, confiscated, destroyed, damaged beyond repair, 
unserviceable or permanently rendered unfit for use, with a 
part complying with paragraph (a) above.
8.13 POOLING OF ENGINES AND PARTS:  Lessee will not enter into 
nor permit any pooling agreement or arrangement in respect 
of any Engine or Part without the prior written consent of 
Lessor.
<PAGE>
8.14 EQUIPMENT CHANGES: 
(a) Lessee will not make any modification or addition to the 
Aircraft (each an "Equipment Change"), except for an 
Equipment Change which:
(i) is expressly permitted by this Agreement; 
(ii) has the prior written approval of Lessor and does not 
diminish or impair the value, utility, condition, or 
airworthiness of the Aircraft; or 
(iii) represents an addition to, and does not diminish 
the value, utility, condition or airworthiness of, the 
Aircraft, can be removed without causing damage to or 
diminishing the condition, airworthiness or value and 
utility of the Aircraft and will be so removed at 
Lessor's request on redelivery.
In addition to the foregoing, Lessee will not make any 
Equipment Change that may adversely affect its ability to 
comply with Year 2000 Compliance (as defined in Section 
17.1(c) hereof) in relation to the Aircraft or any Part.
(b) So long as no Default has occurred and is continuing, 
Lessee may remove any Equipment Change if it can be removed 
from the Aircraft without diminishing or impairing the 
value, utility, condition or airworthiness of the Aircraft. 
8.15 TITLE ON AN EQUIPMENT CHANGE: 
(a) Title to all Parts installed on the Aircraft (whether by 
way of replacement, as the result of an Equipment Change or 
otherwise) will on installation, without further act, vest 
in Owner subject to this Agreement, free and clear of all 
Security Interests (other than Permitted Liens).  Lessee 
will at its own expense take all such steps and execute, 
and procure the execution of, all such instruments as 
Lessor may require and which are necessary to ensure that 
title so passes to Owner according to all applicable Laws.  
At any time when requested by Lessor, Lessee will provide 
evidence to Lessor's satisfaction (including the provision, 
if required, to Lessor of bills of sale and one or more 
legal opinions) that title has so passed to Owner.
(b) Lessor may require Lessee to remove any Equipment Change on 
the Expiry Date and to restore the Aircraft to its 
condition prior to that Equipment Change.
<PAGE>
(c) Any Engine or Part at any time removed from the Aircraft 
will remain the property of Owner until a replacement has 
been effected in accordance with this Agreement and until 
title in that replacement has passed, according to 
applicable Laws, to Owner subject to this Agreement, free 
of all Security Interests (other than Permitted Liens), 
whereupon title to the replaced Engine or Part, will, 
provided no Default has occurred and is continuing, pass to 
Lessee.
9. INSURANCE
9.1 INSURANCES: Lessee will maintain the Insurances in full 
force during the Term, and thereafter as expressly required 
in this Agreement, through such brokers and with such 
insurers and having such deductibles and subject to such 
exclusions as may be approved by Lessor from time to time.  
Insurances shall in any event meet the requirements set 
forth in Schedule 7, which may be amended from time to time 
by Lessor so that the scope and level of cover is 
maintained in line with best industry practice and the 
interests of Lessor and each Indemnitee are prudently 
protected.
9.2 CHANGE: If at any time Lessor wishes to revoke its approval 
of any insurer, reinsurer, insurance or reinsurance, Lessor 
and/or its brokers will consult with Lessee and Lessee's 
brokers (as for the time being approved by Lessor) 
regarding whether that approval should be revoked to 
protect the interests of the parties insured. If, following 
such consultation, Lessor considers that any change should 
be made (and provides a reasonable written explanation to 
Lessee for such change), Lessee will then arrange or 
procure the arrangement of alternative cover satisfactory 
to Lessor.
9.3 INSURANCE UNDERTAKINGS AND INFORMATION: Lessee will:
(a) comply with the terms and conditions of each policy of the 
Insurances and not do, consent or agree to any act or 
omission which:
(i) invalidates or may invalidate the Insurances; or 
(ii) renders or may render void or voidable the whole or 
any part of any of the Insurances; or 
<PAGE>
(iii) brings any particular liability within the scope 
of an exclusion or exception to the Insurances; 
(b) not take out without the prior written approval of Lessor 
any insurance or reinsurance in respect of the Aircraft 
other than those required under this Agreement unless 
relating solely to hull total loss, business interruption, 
profit commission and deductible risk; 
(c) commence renewal procedures at least 30 days prior to 
expiry of any of the Insurances and provide to Lessor:
(i) if requested by Lessor, a written status report of 
renewal negotiation 14 days prior to each expiry date; 
(ii) telecopy confirmation of completion of renewal prior 
to each expiry date; 
(iii) certificates of insurance (and where appropriate 
certificates of reinsurance), and broker's (and any 
reinsurance brokers') letter of undertaking in a form 
acceptable to Lessor in English, detailing the 
coverage and confirming the insurers' (and any 
reinsurers') agreement to the specified insurance 
requirements of this Agreement within 7 days after 
each renewal date; 
(d) on request, provide copies to Lessor of documents or other 
information evidencing the Insurances; and 
(e) provide any other insurance and reinsurance related 
information, or assistance, in respect of the Insurances as 
Lessor may reasonably require. 
9.4 FAILURE TO INSURE: If Lessee fails to maintain the 
Insurances in compliance with this Agreement, each of the 
Indemnitees will be entitled but not bound (without 
prejudice to any other rights of Lessor under this 
Agreement):
(a) to pay the premiums due or to effect and maintain 
insurances satisfactory to it or otherwise remedy Lessee's 
failure in such manner (including, without limitation to 
effect and maintain an "owner's interest" policy) as it 
<PAGE>
considers appropriate. Any sums so expended by it will 
become immediately due and payable by Lessee to Lessor on 
an After-Tax Basis together with interest thereon at the 
Interest Rate, from the date of expenditure by it up to the 
date of reimbursement by Lessee; and
(b) at any time while such failure is continuing to require the 
Aircraft to remain at any airport or to proceed to and 
remain at any airport designated by it until the failure is 
remedied to its satisfaction. 
9.5 CONTINUING INDEMNITY:  Lessee shall effect and maintain 
insurance after the Expiry Date with respect to its 
liability under the indemnity in Clause 10 for 2 years, and 
such insurance shall name each Indemnitee as an additional 
insured. 
10. INDEMNITY
10.1 GENERAL:  Lessee agrees to defend, indemnify and hold 
harmless the Indemnitees on demand from and against any and 
all Losses (regardless of when the same are made or 
incurred):
(a) which may at any time be suffered or incurred directly or 
indirectly as a result of or connected with the possession, 
delivery, performance, management, ownership, registration, 
control, maintenance, condition, service, repair, overhaul, 
leasing, use, operation or redelivery of the Aircraft, any 
Engine or Part (either in the air or on the ground), or the 
occurrence of any Default, whether or not the Losses may be 
attributable to any defect in the Aircraft, any Engine or 
any Part or to its design, testing or use or otherwise, and 
regardless of when the same arise or whether they arise out 
of or are attributable to any act or omission of any 
Indemnitee; or
(b) which arise out of any act or omission which invalidates or 
which renders voidable any of the Insurances; or
(c) which may at any time be suffered or incurred as a 
consequence of any design, article or material in the 
Aircraft, any Engine or any Part or its operation or use 
constituting an infringement of patent, copyright, 
trademark, design or other proprietary right, or a breach 
of any obligation of confidentiality owed to any person in 
respect of any of the matters referred to in this paragraph 
(c); 
<PAGE>
but excluding any Losses in relation to a particular 
Indemnitee to the extent that such Losses (i) are covered 
pursuant to another indemnity provision of this Agreement 
or (ii) arise solely as a result of the gross negligence or 
wilful misconduct of that Indemnitee or (iii) arise solely 
as a result of Lessor Taxes or a Lessor Lien or (iv) arise 
from events occurring after re-delivery of the Aircraft in 
accordance with the provisions hereof unless such Losses 
result from or arise out of an act or omission by Lessee, 
or (v) arise solely as a result of a breach by Lessor of 
its representations and warranties contained in Schedule 2, 
Clause 13 or as a result of the failure by Lessor to 
perform any warranties contained in Schedule 2, Clause 13 
or as a result of the failure by Lessor to perform any of 
its obligations under this Agreement (but excluding any 
such failure which results from any Default), or (vi) have 
been expressly agreed for payment by an Indemnitee, or 
(vii) relate to any Taxes (without prejudice to Lessor's 
rights under any other indemnity provisions of this 
Agreement), or (viii) arise solely as a result of any sale, 
assignment, transfer or other disposition (whether 
voluntary or involuntary) by such Indemnitee of the 
Aircraft or any interest therein, unless such sale, 
transfer or other disposition has resulted from or occurred 
following an Event of Default.  For purposes of the 
foregoing provision, "gross negligence" means, in relation 
to an Indemnitee, any intentional or conscious action or 
decision of such Indemnitee which is taken with reckless 
disregard for the consequences of such action or decision.
10.2 DURATION:  The indemnities contained in this Agreement will 
continue in full force following the Expiry Date 
notwithstanding any breach or repudiation by Lessor or 
Lessee of this Agreement or any termination of the leasing 
of the Aircraft hereunder. 
10.3 SUBROGATION:  Upon payment in full to an Indemnitee of any 
demand for indemnification under Clause 10.1, Lessee shall 
be subrogated to all rights and remedies capable of 
subrogation which any Indemnitee may have against the 
Manufacturer of the Aircraft, its subcontractors and  any 
other Person as to any Losses in  respect of which payment 
has been made, to the extent, in each case, that such 
<PAGE>
Indemnitee shall not have exhausted or divested itself of 
such rights and remedies, and without warranty as to the 
enforceability of such rights and subject to the following 
provisions:
(a)	such Indemnitee shall assist Lessee, at Lessee's sole 
cost and expense, in any manner reasonably requested 
by Lessee for the purpose of enforcing and obtaining 
the rights and benefits intended to be conferred by 
this Clause 10.3 upon Lessee;
(b)	Lessee shall notify Lessor in writing of its intention 
to institute or file any claim or proceeding (a 
"Subrogated Claim") not less than five (5) Business 
Days prior to the proposed date of instituting or 
filing such Subrogated Claim;
(c)	Lessee shall keep Lessor fully informed of any 
Subrogated Claim by Lessee, shall consult with Lessor 
regarding the conduct of such Subrogated Claim;
(d)	Lessor shall be entitled to prohibit conduct of a 
Subrogated Claim by Lessee if the nature of the 
Subrogated Claim (or any related circumstances) is 
such that Lessor or any Indemnitee reasonably 
considers that its reputation may be damaged by such 
Subrogated Claim or be Lessee conducting such 
Subrogated Claim, or (on any other reasonable grounds) 
Lessor or such Indemnitee determines that it is 
prudent for such Subrogated Claim to be conducted by 
Lessor or such Indemnitee itself;
(e)	Lessor shall be entitled, upon consultation with and 
prior written notice to Lessee, to terminate Lessor's 
conduct of Subrogated Claim where an act, delay or 
omission of Lessee indicates that the interests of any 
Indemnitee may be materially adversely prejudiced by 
Lessee's continued conduct thereof;
(f)	the assertion of all such Subrogated Claims herein 
shall comply in all respects with the terms and 
provisions of the Insurances.
<PAGE>
11. EVENTS OF LOSS
11.1 EVENTS OF LOSS:
(a) If an Event of Loss occurs prior to Delivery, this 
Agreement will immediately terminate and except as 
expressly stated in this Agreement neither party will have 
any further obligation or liability under this Agreement 
other than pursuant to Clause 5.19 except that Lessor will 
return the Deposit to Lessee, including any interest earned 
thereon and will return to Lessee or cancel the Letter of 
Credit. 
(b) If an Event of Loss occurs after Delivery, Lessee will pay 
the Agreed Value to Lessor on or prior to the earlier of 
(i) 45 days after the Event of Loss and (ii) the date of 
receipt of insurance proceeds in respect of that Event of 
Loss. 
(c) Subject to the rights of any insurers and reinsurers or 
other third party, upon irrevocable payment in full to 
Lessor of the Agreed Value and all other amounts which may 
be or become payable to Lessor under this Agreement, Lessor 
will without recourse or warranty (except as to freedom 
from Lessor's Liens) procure that Owner transfers to Lessee 
all of Owner's rights to the Aircraft and to any Engines 
and Parts not installed when the Event of Loss occurs but 
which are covered under the Agreed Value, on an as-is 
where-is basis, and procure that Owner will at Lessee's 
expense, execute and deliver such bills of sale and other 
documents and instruments as Lessee may reasonably request 
to evidence (on the public record or otherwise) such 
transfer, free and clear of all rights of Lessor and Owner 
and Lessor Liens.  Lessee shall indemnify on an After-Tax 
Basis Lessor and Owner for all fees, expenses and Taxes 
incurred by Lessor or Owner in connection with any such 
transfer.
(d) Upon the occurrence of an Engine Event of Loss in respect 
of an Engine, Lessee shall give Lessor prompt written 
notice thereof and shall, within 60 days after such 
occurrence, convey to Lessor, as replacement for such 
Engine, title to a Replacement Engine.  Each Replacement 
Engine shall be free of all Security Interests (except 
Permitted Liens) and shall be in as good operating 
condition as the Engine being replaced (assuming that the 
<PAGE>
Engine being replaced was in the condition and repair 
required by this Agreement immediately prior to the Engine 
Event of Loss). Lessee shall have full details of such 
Replacement Engine's source and maintenance records.  Upon 
full compliance by Lessee with the terms of this Clause 
11.1(d), Lessor will transfer to Lessee title to the Engine 
which suffered the Engine Event of Loss.  Prior to or at 
the time of any such conveyance, Lessee, at its own 
expense, will promptly:
(i) furnish Lessor with a full warranty bill of sale, in 
form and substance reasonably satisfactory to Lessor, 
with respect to such Replacement Engine; 
(ii) duly execute a lease supplement (in form and substance 
satisfactory to Lessor) subjecting such Replacement 
Engine to this Agreement, and cause it to be recorded 
pursuant to applicable Law; 
(iii) furnish Lessor with such evidence of title to 
such Replacement Engine as Lessor may reasonably 
request; 
(iv) furnish Lessor with an opinion of Lessee's counsel to 
the effect that title to such Replacement Engine has 
been duly conveyed to Lessor, free and clear of all 
Security Interests, and that such Replacement Engine 
is duly leased hereunder;
(v) furnish a certificate signed by a duly authorized 
financial officer or executive of Lessee certifying 
that, upon consummation of such replacement, no Event 
of Default will have occurred or be continuing;
(vi) furnish Lessor with such documents as Lessor may 
reasonably request in connection with the consummation 
of the transactions contemplated by this Clause 
11.1(d), in each case in form and substance 
satisfactory to Lessor; and
(vii) furnish such financing statements incorporating 
the Replacement Engine as may be reasonably requested 
by Lessor.
11.2 REQUISITION: During any requisition for use or hire of the 
Aircraft, any Engine or Part which does not constitute an 
Event of Loss:
<PAGE>
(a) the Rent and other charges payable under this Agreement 
will not be suspended or abated either in whole or in part, 
and Lessee will not be released from any of its other 
obligations under the Agreement (other than operational 
obligations with which Lessee is unable to comply solely by 
virtue of the requisition); and
(b) so long as no Default has occurred and is continuing, 
Lessee will be entitled to any hire paid by the 
requisitioning authority in respect of the Term. Lessee 
will, as soon as practicable after the end of any such 
requisition, cause the Aircraft to be put into the 
condition required by this Agreement. Lessor will be 
entitled to all compensation payable by the requisitioning 
authority in respect of any change in the structure, state 
or condition of the Aircraft arising during the period of 
requisition, and Lessor will apply such compensation in 
reimbursing Lessee for the cost of complying with its 
obligations under this Agreement in respect of any such 
change, but, if any Default has occurred and is continuing, 
Lessor may apply the compensation or hire in or towards 
settlement of any amounts owing by Lessee under this 
Agreement. 
12. RETURN OF AIRCRAFT
12.1 RETURN: On the Expiry Date or redelivery of the Aircraft 
pursuant to Clause 13.2 or termination of the leasing of 
the Aircraft under this Agreement, Lessee will, unless (i) 
the Aircraft is not then in possession of Lessee as a 
result of a breach by Lessor of its obligations under 
Clause 7.1 of this Agreement (provided however that Lessee 
shall not be excused in such event from (x) complying with 
the conditions set forth in Schedule 6 and (y) ensuring 
that the Aircraft is in a condition qualifying for 
immediate certification of airworthiness by the FAA) or 
(ii) an Event of Loss has occurred, redeliver the Aircraft 
and Aircraft Documents at Lessee's expense to Lessor at the 
Redelivery Location, in accordance with the procedures and 
in compliance with the conditions set forth in Schedule 6, 
free and clear of all Security Interests (other than Lessor 
Liens) and in a condition qualifying for immediate 
certification of airworthiness by the FAA or as otherwise 
agreed by Lessor and Lessee.  If requested by Lessor, 
Lessee shall thereupon cause the Aircraft to be 
deregistered by the Air Authority. 
<PAGE>
12.2 NON-COMPLIANCE: Unless Lessor and Lessee otherwise mutually 
agree, if at the time of Final Inspection Lessee has not 
fully complied with any of its obligations under this 
Agreement (including without limitation the Return 
Conditions), or Lessee fails to make the Aircraft available 
to Lessor on a timely basis for inspection and redelivery 
pursuant to Clause 12.1 and Schedule 6 (whether such 
failure is due to any act or omission of Lessee or any 
other circumstance whatsoever), the Term shall be extended 
until the time when the Aircraft has been redelivered to 
Lessor in full compliance with this Agreement, for the sole 
purpose of enabling such non-compliance or failure to be 
promptly rectified, and during such extension period:
(a) Lessee shall not use the Aircraft in flight operations; 
(b) all Lessee's obligations and covenants under this Agreement 
will remain in full force until Lessee so redelivers the 
Aircraft, and
(c) Lessee shall pay Rent to Lessor at a rate per month equal 
to the monthly Rent specified in Clause 5.3 plus 50 per 
cent, calculated on per diem basis.
Any such extension shall not prejudice Lessor's right to 
treat such non-compliance or failure as an Event of Default 
at any time, and to enforce such rights and remedies as may 
be available to Lessor in respect thereof under the terms 
of this Agreement or applicable Law.  Without limiting the 
generality of the foregoing, Lessee's Rent obligation under 
paragraph (c) above shall be without prejudice to Lessor's 
rights to cancel the letting of the Aircraft and to recover 
damages for the breach of this Agreement pursuant to Clause 
13.2.
Lessor may elect (either on first tender of the Aircraft by 
Lessee or at any time during the said extension period) to 
accept redelivery of the Aircraft notwithstanding non-
compliance with Clause 12.1 or the Return Conditions, in 
which case Lessee will indemnify Lessor, and provide cash 
to Lessor (in an amount reasonably satisfactory to Lessor) 
as security for that indemnity, in respect of the cost to 
Lessor of putting the Aircraft into the condition required 
by this Agreement.
<PAGE>
12.3 REDELIVERY: Upon redelivery Lessee will provide to Lessor, 
upon Lessor's request, all documents necessary to export 
the Aircraft from the Habitual Base (including, without 
limitation, a valid and subsisting export license for the 
Aircraft) and required in relation to the deregistration of 
the Aircraft with the Air Authority. 
12.4 ACKNOWLEDGMENT:  Provided Lessee has complied with its 
obligations under Clause 12 and Schedule 6 of this 
Agreement, following redelivery of the Aircraft by Lessee 
to Lessor at the Redelivery Location, Lessor will deliver 
to Lessee an acknowledgment confirming that Lessee has 
redelivered the Aircraft to Lessor in accordance with this 
Agreement, which acknowledgement shall be without prejudice 
to Lessor's accrued and continuing rights under this 
Agreement.
13. DEFAULT
13.1 EVENTS:  The occurrence of the Events of Default will 
constitute a repudiation (but not a termination) of this 
Agreement by Lessee (whether any such event or condition is 
voluntary or involuntary or occurs by operation of law or 
pursuant to or in compliance with any judgment, decree or 
order of any court or any order, rule or regulation of any 
Government Entity).  Lessee acknowledges that the 
occurrence of any Event of Default would represent a 
material default in the performance of its obligations 
under this Agreement.
13.2 RIGHTS AND REMEDIES: If an Event of Default occurs and is 
continuing, Lessor may at its option (and without prejudice 
to any of its other rights under this Agreement), at any 
time thereafter (without notice to Lessee except as 
required under applicable Law):
(a) by notice to Lessee and with immediate effect on dispatch 
of such notice cancel the letting of the Aircraft (but 
without prejudice to the continuing obligations of Lessee 
under this Agreement), whereupon all rights of Lessee under 
this Agreement shall cease; and/or 
(b) proceed by appropriate court action or actions to enforce 
performance of this Agreement, including, without 
limitation, the payment of all Rent and all other amounts 
payable to Lessor or any Indemnitee pursuant to the terms 
hereof; and/or
<PAGE>
(c) proceed by appropriate court action or actions to recover 
damages for the breach of this Agreement which shall 
include, without limitation:
(i) all Rent and other amounts which are or become due and 
payable hereunder prior to the earlier to occur of the 
date Lessor sells or re-leases the Aircraft or 
receives payment of the amount calculated pursuant to 
clause (ii) below;
(ii) an amount equaling the aggregate Rent for the 
remainder of the Term (determined without reference to 
any right of Lessor to cancel the leasing of the 
Aircraft, whether or not such right is exercised), 
discounted periodically (equal to installment 
frequency) to present worth at the Discount Rate to 
the date of payment by Lessee to Lessor, less the 
amount, if any, of the Mitigation Credit (calculated 
as provided below in Clause 13.4);
(iii) all costs and other incidental damages associated 
with Lessor's exercise of its remedies hereunder or 
otherwise incurred by Lessor as a result of an Event 
of Default, including, but not limited to, 
repossession costs, legal fees, Aircraft storage, 
maintenance and insurance costs, Aircraft re-lease or 
sale costs (including, in the case of a re-lease, any 
costs incurred to transition the Aircraft to the next 
operator's maintenance program) and Lessor's internal 
costs and expenses (including the cost of personnel 
time calculated based upon the compensation paid to 
the individuals involved on an annual basis and a 
general Lessor overhead allocation), all such costs 
and incidental damages being referred to herein 
collectively as "Enforcement and Remarketing Costs";
(iv) any loss, premium, penalty or expense which may be 
incurred in repaying funds raised to finance the 
Aircraft or in unwinding any financial instrument 
relating in whole or in part to Lessor's financing of 
the Aircraft, all such amounts being referred to 
herein collectively as "Unwind Expenses";
<PAGE>
(v) any loss, cost, expense or liability, or damage to 
Lessor's residual interest in the Aircraft, sustained 
by Lessor due to Lessee's failure to maintain the 
Aircraft in accordance with the terms of this 
Agreement or Lessee's failure to redeliver the 
Aircraft in the condition required by this Agreement, 
all such amounts being referred to herein collectively 
as "Aircraft Condition Damages"; and
(vi) such additional amount, if any, as may be necessary to 
place Lessor in the same economic position, on an 
After-Tax Basis, as Lessor would have been in if 
Lessee had timely performed each of its obligations 
under this Agreement; and/or 
(d) either:
(i) enter upon the premises where all or any part of the 
Aircraft is located and take immediate possession of 
and, at Lessor's sole option, remove the same (and/or 
any engine which is not an Engine but which is 
installed on the Airframe, subject to the rights of 
the owner, lessor or secured party thereof), all 
without liability accruing to Lessor for or by reason 
of such entry or taking of possession whether for the 
restoration of damage to property, conversion or 
otherwise, caused by such entry or taking, except 
damages caused by gross negligence or willful 
misconduct; or 
(ii) by delivering notice to Lessee, require Lessee to 
redeliver the Aircraft to Lessor at Shannon 
International Airport, Ireland (or such other location 
as Lessor may require) on the date specified in such 
notice and in all respects in the condition required 
by this Agreement upon the Return Occasion (it being 
understood that Lessee shall not delay any such return 
for the purpose of placing the Aircraft in such 
condition, but shall nevertheless be liable to Lessor 
for the failure of the Aircraft to be in such 
condition); and/or
(e) sell at private or public sale, as Lessor may determine, or 
hold, use, operate or lease to others the Aircraft as 
Lessor in its sole discretion may determine, all free and 
clear of any rights of Lessee; and/or
<PAGE>
(f) by written notice to Lessee specifying a payment date 
(which shall be a date not earlier than five (5) Business 
Days following the date of such notice), Lessor may demand 
that Lessee pay to Lessor, and Lessee shall pay to Lessor 
on the payment date specified in such notice (in lieu of 
the Rent due for the period commencing after the date 
specified for payment in such notice) the sum of the 
following amounts:
(i) all Rent and other amounts which are or are expected 
to become due and payable hereunder prior to the 
payment date specified by Lessor;
(ii) an amount equaling the aggregate Rent for the 
remainder of the Term (determined without reference to 
any right of Lessor to cancel the leasing of the 
Aircraft, whether or not such right is exercised), 
discounted periodically (equal to installment 
frequency) to present worth at the Discount Rate to 
the payment date specified by Lessee to Lessor, less 
the amount, if any, of the Mitigation Credit 
(calculated as provided in Clause 13.4 below);
(iii) an amount equaling Lessor's reasonably 
anticipated Enforcement and Remarketing Costs, Unwind 
Expenses and Aircraft Condition Damages; and
(iv) such additional amount, if any, as may be necessary to 
place Lessor in the same economic position, on an 
After-Tax Basis, as Lessor would have been in if 
Lessee had timely performed each of its obligations 
under this Agreement;
it being understood that, to the extent that any of the 
foregoing amounts represents an estimate by Lessor of 
losses, damages, costs or expenses which Lessor expects to 
incur, (a) Lessor shall adjust the amount thereof as needed 
to reflect the actual amount of such losses, damages, costs 
or expenses incurred by Lessor when substantially all of 
such amounts become known to Lessor, but Lessee shall 
nevertheless be obligated to pay the amount demanded by 
Lessor (subject to such subsequent adjustment), and (b) 
notwithstanding the amount specified in such demand, Lessor 
shall be entitled to claim such other (and greater) amount 
in any action against Lessee hereunder; and/or
<PAGE>
(g) by written notice to Lessee specifying a payment date 
(which shall be a date not earlier than five (5) Business 
Days following the date of such notice), Lessor may demand 
that Lessee pay to Lessor, and Lessee shall pay to Lessor 
on the payment date specified in such notice (in lieu of 
the Rent due for the period commencing after the date 
specified for payment in such notice), any unpaid Rent for 
the Aircraft and other amounts payable under this Agreement 
(prorated in the case of Rent on a daily basis) to and 
including the payment date specified in such notice, plus 
an amount equaling the aggregate Rent for the remainder of 
the Term, discounted periodically (equal to installment 
frequency) to present worth at the Discount Rate, it being 
understood that upon payment of such amount, Lessee shall 
be deemed to have cured the then pending Event of Default, 
and in the absence of a further Event of Default, Lessee 
shall be entitled to retain possession of the Aircraft for 
the remainder of the Term; and/or; 
(h) draw upon the Security Deposit and apply such amounts to 
amounts owing to Lessor hereunder.
In addition to the foregoing, Lessor shall be entitled to 
exercise such other rights and remedies as may be available 
under applicable Law and Lessee shall be liable on an 
After-Tax Basis for, and shall pay Lessor on demand:  (i)  
interest on all unpaid amounts at the Interest Rate, from 
the due date until the date of payment in full; (ii) all 
reasonable legal fees and other reasonable costs and 
expenses incurred by Lessor by reason of the occurrence of 
any Event of Default or the exercise of Lessor's remedies 
with respect thereto; and (iii) all reasonable expenses, 
disbursements, costs and fees incurred in (A) repossessing, 
storing, preserving, shipping, maintaining, repairing and 
refurbishing the Aircraft, the Airframe, any Engine or Part 
to the condition required by Clause 12 hereof and 
(B) preparing the Aircraft, the Airframe, an Engine or Part 
for sale or lease, advertising the sale or lease of the 
Aircraft, the Airframe, an  Engine or Part and selling or 
releasing the Aircraft, the Airframe, an Engine or Part.
Lessor is hereby authorized and instructed, but shall have 
no obligation, to make any expenditures which Lessor, in 
its sole discretion, considers advisable to repair and 
restore the Aircraft, the Airframe, an Engine or Part to 
the condition required by Clause 12 hereof (it being 
understood that Lessee shall be liable for all such 
expenditures).
<PAGE>
Lessee hereby agrees that, in the event of the return to or 
repossession by Lessor of the Aircraft, the Airframe, an 
Engine or Part, any rights in any warranty (express or 
implied) previously assigned to Lessee or otherwise held by 
Lessee shall without further act, notice or writing be 
assigned or reassigned to Lessor, if assignable.
No remedy referred to in this Clause 13 is intended to be 
exclusive, but, to the extent permissible hereunder or 
under applicable Law, each shall be cumulative and in 
addition to any other remedy referred to above or otherwise 
available to Lessor at Law or in equity; and the exercise 
or beginning of exercise by Lessor of any one or more of 
such remedies shall not preclude the simultaneous or later 
exercise by Lessor of any or all of such other remedies; 
provided, however, that nothing in this Clause 13 shall be 
construed to permit Lessor to obtain a duplicate recovery 
of any element of damages to which Lessor is entitled.  No 
express or implied waiver by Lessor of any Default or Event 
of Default shall in any way be, or be construed to be, a 
waiver of any future or subsequent Default or Event of 
Default.
13.3 POWER OF ATTORNEY:   Lessee hereby appoints Lessor as the 
attorney-in-fact of Lessee, with full authority in the 
place and stead of Lessee and in the name of Lessee or 
otherwise, for the purpose of carrying out the provisions 
of this Agreement and taking any action and executing any 
instrument that Lessor may deem necessary or advisable to 
accomplish the purposes hereof; provided, however, that 
Lessor may only take action or execute instruments under 
this Clause 13 after an Event of Default has occurred and 
is continuing.  Lessee hereby declares that the foregoing 
powers are granted for valuable consideration, constitute 
powers granted as security for the performance of the 
obligations of Lessee hereunder and are coupled with an 
interest and shall be irrevocable.  Without limiting the 
generality of the foregoing or any other rights of Lessor 
under this Agreement, upon the occurrence and during the 
continuation of an Event of Default, Lessor shall have the 
sole and exclusive right and power to (i) settle, 
compromise, compound, adjust or defend any actions, suits 
or proceedings relating to or pertaining to the Aircraft, 
Airframe or any Engine, or this Agreement and (ii) make 
<PAGE>
proof of loss, appear in and prosecute any action arising 
from any policy or policies of insurance maintained 
pursuant to this Agreement, and settle, adjust or 
compromise any claims for loss, damage or destruction 
under, or take any other action in respect of, any such 
policy or policies.
13.4 MITIGATION CREDIT:  Lessee shall be entitled to have a 
Mitigation Credit deducted from any recovery by Lessor from 
Lessee of Rent for the unexpired portion of the Term.  Such 
Mitigation Credit shall be in one of the following amounts, 
with Lessor to select the amount which in its reasonable 
judgment will place Lessor in the same economic position, 
on an After-Tax Basis, as Lessor would have been in if 
Lessee had timely performed each of its obligations under 
this Agreement:
(a) in the event that Lessor has re-let the Aircraft on terms 
(other than rental payment terms) which, taken as a whole, 
Lessor regards as being substantially similar to the terms 
of this Agreement, an amount equaling the aggregate basic 
rental payments to become due for the period coinciding 
with the remainder of the Term (determined without 
reference to any right of Lessor to cancel the leasing of 
the Aircraft, whether or not such right is exercised), 
discounted periodically (equal to installment frequency) to 
present worth at the Discount Rate to the date of payment 
by Lessee; or
(b) in the event that Lessor has not re-let the Aircraft or has 
re-let the Aircraft on terms (other than rental payment 
terms) which, taken as a whole, Lessor does not regard as 
being substantially similar to the terms of this Agreement, 
an amount equaling the fair market rental value (determined 
pursuant to the Appraisal Procedure) of the Aircraft for 
the period commencing with the date that Lessor reasonably 
anticipates that the Aircraft could be re-let at such 
rental rate and ending with the date that the Term was 
scheduled to expire (determined without reference to any 
right of Lessor to cancel the leasing of the Aircraft, 
whether or not such right is exercised), discounted 
periodically (equal to installment frequency) to present 
worth at the Discount Rate to the date of payment by 
Lessee; or
<PAGE>
(c) in the event that Lessor has not recovered possession of 
the Aircraft, or Lessor has recovered possession of the 
Aircraft but Lessee's breach of this Agreement has resulted 
in a reduction in the volume of Lessor's business, the 
amount of expense, if any, avoided by Lessor as a result of 
being relieved of its obligations to Lessee under this 
Agreement prior to the date that the Term was scheduled to 
expire (determined without reference to any right of Lessor 
to cancel the leasing of the Aircraft, whether or not such 
right is exercised).
14. ASSIGNMENT
14.1 LESSEE:  LESSEE WILL NOT ASSIGN, TRANSFER (VOLUNTARILY OR 
INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE) OR CREATE 
OR PERMIT TO EXIST ANY SECURITY INTEREST OVER, ANY OF ITS 
RIGHTS UNDER THIS AGREEMENT WITHOUT THE PRIOR WRITTEN 
CONSENT OF LESSOR, SUCH CONSENT NOT TO BE UNREASONABLY 
WITHHELD IN THE CASE OF ASSIGNMENTS OR TRANSFERS BY MERGER. 
14.2 ASSIGNMENT BY LESSOR:  Lessee agrees that Lessor may at any 
time during the Term assign its rights under this 
Agreement.  Notwithstanding any such assignment, Lessor 
will remain entitled to the benefit of each indemnity and 
the liability insurances effected under this Agreement. At 
Lessor's sole cost and expense, Lessee will promptly 
execute all documents reasonably requested by Lessor to 
effect, perfect, record or implement any such assignment, 
and will promptly comply with any other reasonable requests 
of Lessor, its successors and assigns in respect of any 
such assignment.
14.3 TRANSFER BY LESSOR: Lessee agrees that Lessor may at any 
time during the Term transfer by way of novation its rights 
and obligations under this Agreement, and upon completion 
of any such novation (including the assumption by the 
transferee of all of Lessor's remaining obligations under 
this Agreement) Lessor will be released from and will have 
no further obligation under this Agreement.  At Lessor's 
sole cost and expense, Lessee will promptly execute all 
documents reasonably requested by Lessor to effect, 
perfect, record or implement any such novation, and will 
promptly comply with any other reasonable requests of 
Lessor, its successors and assigns in respect of any such 
novation. Lessor shall pay all costs and expenses of Lessee 
(including reasonable legal fees and expenses) in 
<PAGE>
connection with any sale, assignment or transfer by Lessor, 
other than a sale, assignment or transfer to Lessee or 
unless such sale, assignment or transfer has resulted from 
or occurs following an Event of Default.
14.4 CONDITIONS OF RIGHTS OF ASSIGNMENT AND TRANSFER:  Lessor's 
rights of assignment, transfer, sale, encumbrance or other 
disposition as set forth in this Clause 14 above are 
subject to compliance with the following conditions:
(a) prior to such assignment, transfer, sale, encumbrance or 
other disposition becoming effective, Lessor will procure 
that the assignee (including any security assignee) or 
transferee or any new owner of the Aircraft (save where 
such new owner is also the "Lessor" hereunder) or any new 
holder of a mortgage over the Aircraft or (where lessor as 
transferor is not the original Lessor hereunder or an 
affiliate thereof) any holder of any interest in the 
Aircraft (by way of security or otherwise), as the case may 
be, shall execute and deliver to Lessee a letter of quiet 
enjoyment in respect to Lessee's use and possession of the 
Aircraft substantially in the form set forth in Schedule 14 
hereto;
(b) Lessee shall, immediately after such assignment, transfer, 
sale, encumbrance or other disposition not be liable to pay 
any Person, including any new owner of the Aircraft, for 
any greater amount hereunder than that which it would have 
been obliged to pay under this Agreement if no such 
assignment, transfer, sale, encumbrance or other 
disposition had taken place;
(c) such assignment, transfer, sale, encumbrance or other 
disposition shall not alter the terms and conditions of 
this Agreement as they define Lessee's rights and 
obligations without the prior consent of Lessee; provided, 
however, that such consent shall not be withheld or 
required where Lessee's obligations are not increased as a 
result thereof;
(d) in connection with any proposed assignment, transfer, sale, 
encumbrance or other disposition, Lessor will provide to 
Lessee such financial and other relevant information 
available to it and not subject to any agreement with 
respect to confidentiality in respect of the proposed 
transferee (and, as appropriate, the entity which supports 
<PAGE>
the proposed transferee) within a reasonable period prior 
to the effectiveness of such transfer as Lessee may 
reasonably request; and
(e) Lessor shall not effect such assignment, transfer, sale, 
encumbrance or other disposition to any proposed transferee 
which is or shares common owners with a certified air 
carrier which operates a commercial airline business.
15. ILLEGALITY
If it is or becomes unlawful in any jurisdiction for Lessor 
to give effect to any of its obligations as contemplated by 
this Agreement or to continue this Agreement, the parties 
hereto shall use their best efforts to modify or amend this 
Agreement so as to render it valid, legal and enforceable.  
In the event that it is not reasonably possible to so 
modify or amend this Agreement within a reasonable time 
period, Lessor may by notice in writing to Lessee terminate 
the leasing of the Aircraft under this Agreement, such 
termination to take effect on the latest date (the 
"Effective Date") on which Lessor may continue such leasing 
and such obligations without being in breach of applicable 
laws or regulations, and Lessee will forthwith redeliver 
the Aircraft to Lessor in accordance with Clause 12. 
Without prejudice to the foregoing, Lessor will consult in 
good faith with Lessee up to the Effective Date as to any 
steps which may be taken (at no cost to Lessor) to 
restructure the transaction to avoid such unlawfulness, but 
will be under no obligation to take any such steps.
16. MISCELLANEOUS
16.1 WAIVERS, REMEDIES CUMULATIVE: The rights of Lessor under 
this Agreement may be exercised as often as necessary, are 
cumulative and not exclusive of its rights under any Law; 
and may be waived only in writing and specifically.  Delay 
by Lessor in exercising, or non-exercise of, any such right 
will not constitute a waiver of that right. 
16.2 DELEGATION: Lessor may delegate to any Person all or any of 
the rights, powers or discretions vested in it by this 
Agreement and any such delegation may be made upon such 
terms and conditions and subject to such regulations 
(including power to sub-delegate) as Lessor in its absolute 
discretion thinks fit. 
<PAGE>
16.3 SEVERABILITY:  Without prejudice to Clause 15 and paragraph 
(k) of Schedule 9, if a provision of this Agreement is or 
becomes illegal, invalid or unenforceable in any 
jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that 
jurisdiction of any other provision of this Agreement; or 
(b) the legality, validity or enforceability in any other 
jurisdiction of that or any other provision of this 
Agreement. 
16.4 REMEDY:  If Lessee fails to comply with any provision of 
this Agreement, Lessor may, without being in any way 
obliged to do so or responsible for so doing and without 
prejudice to the ability of Lessor to treat such non-
compliance as a Default, effect compliance on behalf of 
Lessee, whereupon Lessee shall become liable to reimburse 
Lessor on an After-Tax Basis immediately any sums expended 
by Lessor together with all costs and expenses (including 
legal costs) in connection therewith. 
16.5 TIME OF ESSENCE: The time stipulated in this Agreement for 
all payments payable by Lessee to Lessor and the prompt, 
punctual performance of Lessee's other obligations under 
this Agreement are of the essence of this Agreement. 
16.6 NOTICES: All notices under, or in connection with, this 
Agreement will, unless otherwise stated, be given in 
writing by letter, or facsimile.  Any such notice is deemed 
effectively to be given as follows:
(i) if by letter, on the earlier of the date when 
delivered and the 7th day after dispatch;  and
(ii) if by facsimile, when transmitted and full 
transmission has been separately notified by telephone 
by the transmitting party. 
The addresses and facsimile and telephone numbers of Lessee 
and Lessor are as follows:
<PAGE>
Lessee:
Address:	7000 Squibb Road, 3rd Floor
	Mission, Kansas 66202
Attn:	Vice President Finance and CFO 
Facsimile:	(913) 789-1351
Telephone:	(913) 789-1769
with a copy to:
Address:	7000 Squibb Road, 3rd Floor
	Mission, Kansas  66202
Attn:	Vice President and General Counsel
Facsimile:	(913) 789-1351
Telephone:	(913) 789-1713
Lessor:
Address:	Lee Farm Corporate Park
 	83 Wooster Heights Road
	Danbury, CT  06810
Attn:	Contracts
Facsimile:	(203) 830-4764
Telephone:	(203) 830-4760
With a copy to:	GE Capital Aviation Services, Inc.
	201 High Ridge Road
	Stamford, CT  06927-4900
Attn:	Senior Vice President - Portfolio 
and Risk Management
Facsimile:	(203) 357-4585
Telephone:	(203) 357-3776
<PAGE>
16.7 GOVERNING LAW AND JURISDICTION: 
(a) THIS AGREEMENT IN ALL RESPECTS SHALL BE GOVERNED AND 
CONSTRUED IN ACCORDANCE WITH THE GOVERNING LAW (INCLUDING 
WITHOUT LIMITATION MATTERS OF FORMATION, CONSTRUCTION, 
VALIDITY AND PERFORMANCE BUT EXCLUDING CONFLICTS OF LAW 
PRINCIPLES).  
(b) For the benefit of Lessor, Lessee agrees that the courts of 
the United States District Court for the Southern District 
of New York and any New York state court sitting in the 
City of New York, New York are to have nonexclusive 
jurisdiction to settle any disputes arising out of or 
relating to this Agreement and submits itself and its 
property to the nonexclusive jurisdiction of the foregoing 
courts with respect to such disputes.
(c) Without prejudice to any other mode of service, Lessee:
(i) appoints Corporation Services Company, 80 State 
Street, Albany, New York 12207-2543 as its agent for 
service of process relating to any proceedings before 
the New York courts in connection with this Agreement 
and agrees to maintain the process agent in New York 
notified to Lessor;
(ii) agrees that failure by a process agent to notify 
Lessee of the process shall not invalidate the 
proceedings concerned; and
(iii) consents to the service of process relating to 
any such proceedings by prepaid mailing of a copy of 
the process to Lessee's agent at the address 
identified in paragraph (i) or by prepaid mailing by 
air mail, certified or registered mail of a copy of 
the process to Lessee at the address set forth in 
Clause 16.7.
(d) Lessee:
(i) waives to the fullest extent permitted by Law any 
objection which Lessee may now or hereafter have to 
the courts referred to in Clause 16.7(b) above on 
grounds of inconvenient forum or otherwise as regards 
proceedings in connection with this Agreement; 
<PAGE>
(ii) waives to the fullest extent permitted by Law any 
objection which Lessee may now or hereafter have to 
the laying of venue of any suit, action or proceeding 
arising out of or relating to this Agreement brought 
in the courts referred to in Clause 16.7(b); and
(iii) agrees that a judgment or order of any court 
referred to in Clause 16.7(b)  in connection with this 
Agreement is conclusive and binding on it and may be 
enforced against it in the courts of any other 
jurisdiction.
(e) Nothing in this Clause 16.7 limits the right of Lessor to 
bring proceedings against Lessee in connection with this 
Agreement:
(i) in any other court of competent jurisdiction; or 
(ii) concurrently in more than one jurisdiction.
(f) Lessee irrevocably and unconditionally:
(i) agrees that if Lessor brings legal proceedings against 
it or its assets in relation to this Agreement no 
immunity from such legal proceedings (which will be 
deemed to include without limitation, suit, attachment 
prior to judgment, other attachment, the obtaining of 
judgment, execution or other enforcement) will be 
claimed by or on behalf of itself or with respect to 
its assets; 
(ii) waives any such right of immunity which it or its 
assets now has or may in the future acquire; and 
(iii) consents generally in respect of any such 
proceedings to the giving of any relief or the issue 
of any process in connection with such proceedings 
including, without limitation, the making, enforcement 
or execution against any property whatsoever 
(irrespective of its use or intended use) of any order 
or judgment which may be made or given in such 
proceedings. 
16.8 SOLE AND ENTIRE AGREEMENT: This Agreement is the sole and 
entire agreement between Lessor and Lessee in relation to 
the leasing of the Aircraft, and supersedes all previous 
agreements in relation to that leasing. 
<PAGE>
16.9 INDEMNITEES: All rights expressed to be granted to each 
Indemnitee (other than Lessor) under this Agreement are 
given to Lessor on behalf of that Indemnitee.
16.10 COUNTERPARTS: This Agreement may be executed two or 
more counterparts, each of which shall be deemed an 
original, but all of which together shall constitute one 
and the same instrument.  To the extent, if any, that this 
Agreement constitutes chattel paper (as such term is 
defined in the Uniform Commercial Code as in effect in any 
applicable jurisdiction) no security interest in this 
Agreement may be created through the transfer or possession 
of any counterpart other than the counterpart that has been 
marked "Counterpart No. 1" on the cover page thereof.
16.11 LANGUAGE: All notices to be given under this Agreement 
will be in English.  All documents delivered to Lessor 
pursuant to this Agreement (including without limitation 
any documents to be delivered pursuant to the Conditions 
Precedent) will be in English, or if not in English, will 
be accompanied by a certified English translation.  If 
there is any inconsistency between the English version of 
this Agreement and any version in any other language, the 
English version will prevail. 
17. DISCLAIMERS AND WAIVERS:
LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND 
CONFIRMATIONS SET FORTH IN CLAUSES 17.1 TO 17.4 BELOW SHALL 
APPLY AT ALL TIMES DURING THE TERM.  LESSEE'S ACCEPTANCE OF 
THE AIRCRAFT IN ACCORDANCE WITH CLAUSE 4.2 SHALL BE 
CONCLUSIVE EVIDENCE THAT LESSEE HAS FULLY INSPECTED THE 
AIRCRAFT AND EVERY PART THEREOF AND THAT THE AIRCRAFT, THE 
ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS ARE 
TECHNICALLY ACCEPTABLE TO LESSEE AND SATISFY THE DELIVERY 
CONDITION REQUIREMENTS AND ARE IN SUITABLE CONDITION FOR 
DELIVERY TO AND ACCEPTANCE BY LESSEE.
17.1 EXCLUSION: THE AIRCRAFT IS TO BE LEASED AND DELIVERED 
HEREUNDER "AS IS, WHERE IS", AND LESSEE AGREES AND 
ACKNOWLEDGES THAT, SAVE AS EXPRESSLY STATED IN THIS 
AGREEMENT:
<PAGE>
(a) LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR 
HAS NOT AND WILL NOT BE DEEMED TO HAVE MADE OR GIVEN 
(WHETHER BY VIRTUE OF HAVING DONE OR FAILED TO DO ANY ACT, 
OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR 
IN RELATION TO THIS AGREEMENT OR OTHERWISE), ANY WARRANTIES 
OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO, 
THE AIRCRAFT OR ANY ENGINE OR PART, INCLUDING (BUT NOT 
LIMITED TO) THE DESCRIPTION, AIRWORTHINESS, COMPLIANCE WITH 
SPECIFICATIONS, OPERATION, MERCHANTABILITY, FREEDOM FROM 
INFRINGEMENT OF PATENT OR OTHER PROPRIETARY RIGHTS, FITNESS 
FOR ANY PARTICULAR USE OR PURPOSE, VALUE, DURABILITY, 
CONDITION, OR DESIGN, OR AS TO THE QUALITY OF THE MATERIAL 
OR WORKMANSHIP, THE ABSENCE OF LATENT OR OTHER DEFECTS, 
WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER MATTER 
WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED 
WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR DEALING OR 
USAGE OF TRADE) WITH RESPECT TO THE AIRCRAFT, ANY ENGINE OR 
ANY PART; AND
(b) LESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY 
WHATSOEVER TO LESSEE (WHETHER ARISING IN CONTRACT OR IN 
TORT, AND WHETHER ARISING BY REFERENCE TO NEGLIGENCE OR 
STRICT LIABILITY OF LESSOR OR OTHERWISE) FOR:
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE 
CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY 
ENGINE OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR 
DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN 
CONNECTION THEREWITH;
(ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR 
ANY RISKS RELATING THERETO; 
(iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR 
ANTICIPATED PROFITS OR ANY OTHER DIRECT, INDIRECT OR 
CONSEQUENTIAL LOSS OR DAMAGE; OR
(iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, 
REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT, 
ANY ENGINE OR ANY PART.
<PAGE>
(c) LESSOR WILL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER IN 
CONNECTION WITH, THE YEAR 2000 COMPLIANCE (AS HEREINAFTER 
DEFINED) OF THE AIRCRAFT OR ANY PART THEREOF.  FOR PURPOSES 
OF THIS AGREEMENT, THE TERM "YEAR 2000 COMPLIANCE" SHALL 
MEAN AND INCLUDE THE ABILITY OF THE AIRCRAFT AND EACH PART 
THEREOF TO ACCURATELY PROCESS, PROVIDE AND/OR RECEIVE 
DATE/TIME DATA (INCLUDING WITHOUT LIMITATION CALCULATING, 
COMPARING, OUTPUTTING AND SEQUENCING), WITHIN, FROM, INTO, 
AND BETWEEN THE TWENTIETH CENTURY AND THE TWENTY-FIRST 
CENTURY, INCLUDING LEAP YEAR CALCULATIONS SUCH THAT NEITHER 
THE AIRCRAFT NOR ANY PART THEREOF OR SERVICE RELATED 
THERETO WILL BE AFFECTED BY DATES/TIMES PRIOR TO, ON, AFTER 
OR SPANNING JANUARY 1, 2000.
17.2 WAIVER: LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE 
LESSOR, ALL ITS RIGHTS IN RESPECT OF ANY WARRANTY OR 
REPRESENTATION, EXPRESS OR IMPLIED, ON THE PART OF LESSOR 
AND ALL CLAIMS AGAINST LESSOR HOWSOEVER AND WHENEVER 
ARISING AT ANY TIME IN RESPECT OF OR OUT OF ANY OF THE 
MATTERS REFERRED TO IN CLAUSE 17.1.
17.3 DISCLAIMER OF CONSEQUENTIAL DAMAGES:  EACH OF LESSOR AND 
LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND 
HEREBY DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY OTHERWISE 
HAVE TO RECOVER, LOST PROFITS OR REVENUES OR CONSEQUENTIAL 
DAMAGES AS SUCH TERM IS DEFINED IN SECTION 2-A-520 OF THE 
NEW YORK UNIFORM COMMERCIAL CODE AS A RESULT OF ANY BREACH 
OR ALLEGED BREACH BY LESSOR OF ANY OF THE AGREEMENTS, 
REPRESENTATIONS OR WARRANTIES OF LESSOR CONTAINED IN THIS 
AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS.
17.4 CONFIRMATION: LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE 
PROVISIONS OF THIS CLAUSE 17 AND ACKNOWLEDGES THAT RENT AND 
OTHER AMOUNTS HAVE BEEN CALCULATED BASED ON ITS PROVISIONS
18. BROKERS AND OTHER THIRD PARTIES.
18.1 NO BROKERS:  Each of the parties hereby represents and 
warrants to the other that it has not paid, agreed to pay 
or caused to be paid directly or indirectly in any form, 
any commission, percentage, contingent fee, brokerage or 
other similar payments of any kind, in connection with the 
establishment or operation of this Agreement, to any Person 
(other than fees payable to Lessee's legal advisors or 
IAMG).  
<PAGE>
18.2 INDEMNITY:  Each party agrees to indemnify and hold the 
other harmless from and against any and all claims, suits, 
damages, costs and expenses (including, but not limited to 
reasonable attorneys' fees) asserted by any agent, broker 
or other third party for any commission or compensation of 
any nature whatsoever based upon this Agreement or the 
Aircraft, if such claim, suit, damage, cost or expense 
arises out of breach by the indemnifying party, its 
employees or agents of Clause 18.1.  
19. SECTION 1110
(a) Lessee acknowledges that Lessor would not have entered into 
this Agreement unless it had available to it the benefits 
of a lessor under Section 1110 of Title 11 of the United 
States Code.  Lessee covenants and agrees with Lessor that 
to better ensure the availability of such benefits, Lessee 
shall support any motion, petition or application filed by 
Lessor with any bankruptcy court having jurisdiction over 
Lessee, whereby Lessor seeks recovery of possession of the 
Aircraft under said Section 1110 and shall not in any way 
oppose such action by Lessor unless Lessee shall have 
complied with the requirements of said Section 1110 to be 
fulfilled in order to entitle Lessee to continued use and 
possession of the Aircraft hereunder.  In the event said 
Section 1110 is amended, or if it is repealed and another 
statute is enacted in lieu thereof, Lessor and Lessee agree 
to amend this Agreement and take such other action not 
inconsistent with this Agreement as Lessor reasonably deems 
necessary so as to afford to Lessor the rights and benefits 
as such amended or substituted statute confers upon owners 
and lessors of aircraft similarly situated to Lessor. 
(b) Lessor and Lessee mutually agree and acknowledge that this 
Agreement is to be treated as a lease for United States 
federal income tax purposes.
20. USURY LAWS:  The parties intend to contract in strict 
compliance with the usury Laws of the State of New York 
and, to the extent applicable, the United States of 
America.  Notwithstanding anything to the contrary in the 
Operative Documents, Lessee will not be obligated to pay 
any interest in excess of the maximum non-usurious interest 
<PAGE>
rate, as in effect from time to time, which may by 
applicable Law be charged, contracted for, reserved, 
received or collected by Lessor in connection with the 
Operative Documents.  During any period of time in which 
the then-applicable highest lawful rate is lower than the 
rate specified in Clauses 5.11 or 13.2, interest will 
accrue and be payable at such highest lawful rate; however, 
if at later times such highest lawful rate is greater than 
the rate specified in Clauses 5.11 or 13.2, then Lessee 
will pay interest at the highest lawful rate until the 
aggregate amount of interest paid by Lessee equals the 
amount of interest that would have been payable in 
accordance with the interest rate specified in Clauses 5.11 
or 13.2. 
<PAGE>
21. MODIFICATION OR REVISION:
Neither this Agreement nor any term of this Agreement may be 
modified, rescinded, changed waived, discharged or 
terminated except by a writing signed by the party to be 
charged.  Lessor and Lessee acknowledge their agreement to 
the provision of this Clause 21 by their initials below:
LESSOR: __________		LESSEE: ____________
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this 
Agreement as of the date shown at the beginning of this 
Agreement. 
LESSOR:	SIGNED on behalf of AEROUSA, INC.
By:	___________________________ 
Name:	___________________________ 
Title:	___________________________ 
LESSEE:	SIGNED on behalf of VANGUARD AIRLINES, INC.
By:	___________________________ 
Name:	___________________________ 
Title:	___________________________ 
<PAGE>
SCHEDULE 1

DEFINITIONS
The following words and expressions have the respective meanings 
set forth below:
"A" CHECK means an "A" check in accordance with the 
Manufacturer's Maintenance Planning Document as in effect on the 
Delivery Date.
AFTER-TAX BASIS means in the case of any amount payable on an 
"After-Tax Basis" to or for the benefit of any Person (including 
any amount payable pursuant to this definition), after deduction 
of the net amount of all Taxes required to be paid by such 
Person with respect to the receipt or accrual by it of such 
amount (and assuming that such Person is subject to (i) United 
States Federal income tax at the highest marginal statutory rate 
imposed on corporations for the relevant period, (ii) United 
States state and local income taxes at the composite of the 
highest marginal statutory rates imposed on such Person for the 
relevant period, as such composite rate shall be certified by a 
financial officer of such Person, and (iii) income taxes (if 
any) imposed by countries outside the United States at the 
actual rates imposed on such Person).
AGREEMENT means this Agreement, each Lease Supplement, any 
schedules or documents executed pursuant to the Schedules 
hereto, and any and all amendments, revisions, supplements and 
modifications thereto.
AIR AUTHORITY means the FAA.
AIRCRAFT means the aircraft described in Part 1 of Schedule 4, 
(which term includes where the context admits a separate 
reference to all Engines, Parts and Aircraft Documents).
AIRCRAFT CONDITION DAMAGES has the meaning given in Clause 
13.2(c)(v).
AIRCRAFT DOCUMENTS means the documents, data and records 
identified in the list attached to the Certificate of Technical 
Acceptance and any other documents and records referred to in 
Clause 8.8, and all additions, renewals, revisions and 
replacements from time to time made in accordance with this 
Agreement. 
<PAGE>
AIRFRAME means the Aircraft, excluding the Engines and Aircraft 
Documents.
APPRAISAL PROCEDURE means the following procedure for 
determining the "fair market rental value" of the Aircraft:  (a) 
Lessor shall select an independent aircraft appraiser who shall 
make a determination of "fair market rental value" of the 
Aircraft; and (b) the fees and expenses of the appraiser shall 
be paid by Lessee.  "Fair market rental value" shall mean the 
value determined by an appraisal completed on an "as-is" and 
"where-is" basis.
APU means the auxiliary power unit installed on the Aircraft on 
the Delivery Date and any replacement auxiliary power unit 
installed on the Aircraft and title to which is transferred to 
Owner in accordance with this Agreement. 
"B" CHECK means a "B" check in accordance with the 
Manufacturer's Maintenance Planning Document as in effect on the 
Delivery Date.
BOEING	 means The Boeing Company, a Delaware corporation with 
its principal office in Seattle, State of Washington, U.S.A.
BUSINESS DAY means any day other than a Saturday, Sunday or 
other day on which banking institutions in New York, New York 
are authorized or required by Law to be closed.
"C" CHECK means a "C" check in accordance with the 
Manufacturer's Maintenance Planning Document as in effect on the 
Delivery Date.
CERTIFICATED AIR CARRIER means any Person (except the United 
States Government) that is a citizen of the United States of 
America (as defined in Section 40102 of Title 49 of the United 
States Code) and holding a Certificate of Public Convenience and 
Necessity issued under Section 41102 of Title 49 of the United 
States Code by the Department of Transportation or any 
predecessor or successor agency thereto, or, in the event such 
certificates shall no longer be issued, any Person (except the 
United States Government) that is a citizen of the United States 
of America (as defined in Section 40102 of Title 49 of the 
United States Code) and legally engaged in the business of 
transporting for hire passengers or cargo by air predominantly 
to, from or between points within the United States of America, 
and, in either event, operating commercial jet aircraft capable 
of carrying ten or more individuals or 6,000 pounds or more of 
cargo, which also is certificated so as to entitle Lessor, as a 
lessor, to the benefits of Section 1110 of Title 11 of the 
United States Code with respect to the Aircraft.
<PAGE>
COLD SECTION REFURBISHMENT means, with respect to any Engine, 
the completion of the following:  complete unstacking of both 
high and low compressors and complete visual inspection; de-
blading discs as necessary; visual inspections of all discs; 
verification that all snap diameters on discs are within limits; 
inspection of all blades for proper chord dimensions and 
cracking; repair or replacement of blades below minimums; 
inspection and repair of stators as necessary; blade-up of discs 
using new lock plates; assembly of rotors in the compressor; 
balance of all rotors; and installation of rotors in the Engine.
CYCLE	 means one take-off and landing of the Aircraft. 
DAMAGE NOTIFICATION THRESHOLD means $100,000.
"D" CHECK means a "D" check in accordance with the 
Manufacturer's Maintenance Planning Document as in effect on the 
Delivery Date.
DEFAULT	 means any Event of Default or any event or circumstance 
which, with the giving of notice and/or lapse of time and/or 
determination of materiality and/or fulfillment of a condition 
would constitute an Event of Default.
DELIVERY	 means delivery of the Aircraft by Lessor to Lessee 
under this Agreement.
DELIVERY CONDITION REQUIREMENTS means the requirements specified 
in Part 2 of Schedule 4.
DELIVERY DATE means the date on which Delivery occurs. 
DELIVERY LOCATION means Budapest International Airport, 
Budapest, Hungary.
DEPOSIT	 means all amounts payable pursuant to Clause 5.1.
DOLLARS AND $ means the lawful currency of the United States of 
America. 
<PAGE>
ERISA	 means the Employee Retirement Income Security Act of 1974, 
as amended.
ENFORCEMENT AND REMARKETING COSTS has the meaning given in 
Clause 13.2(c)(iii).
ENGINE means, whether or not installed on the Aircraft:
(a)	each engine of the manufacture and model specified in Part 
1 of Schedule 4 (each of which has 750 or more rated 
takeoff horsepower or the equivalent of such horsepower) 
which Lessor elects to tender to Lessee with the Airframe 
on the Delivery Date, such engines being described as to 
serial numbers on the Certificate of Technical Acceptance 
to be executed by Lessee on or prior to delivery of the 
Aircraft and in Schedule 1 to Lease Supplement No. 1 to be 
executed by Lessee and Lessor upon delivery of the 
Aircraft;
(b)	any Replacement Engine, with effect from the time when 
title has passed to Owner in accordance with this 
Agreement; 
and in each case includes all modules and Parts from time to 
time belonging to or installed in that engine but excludes any 
properly replaced engine, title to which should have passed to 
Lessee pursuant to this Agreement. 
ENGINE CYCLE means operation of an engine on an aircraft from 
and including a take-off to and including the landing of that 
aircraft.
ENGINE EVENT OF LOSS means the occurrence with respect to an 
Engine only, whether or not installed on the Airframe, of any of 
those events described in the definition of Event of Loss.
ENGINE FLIGHT HOUR means each hour or part thereof an Engine is 
operated, elapsing from the moment the wheels of an aircraft on 
which such Engine is installed leave the ground until the wheels 
of such aircraft next touch the ground.
ENGINE REFURBISHMENT means all scheduled and unscheduled off-
the-wing Engine maintenance and repair accomplished for each 
module in accordance with the performance restoration or full 
overhaul sections of the Manufacturer's workscope planning 
guide.  
EQUIPMENT CHANGE has the meaning given in Clause 8.14(a).
<PAGE>
EVENT OF DEFAULT means any event or condition specified Schedule 
9.
EVENT OF LOSS means with respect to the Aircraft (including for 
the purposes of this definition the Airframe):
(a)	the actual or constructive total loss of the Aircraft 
(including any damage to the Aircraft which results in an 
insurance settlement on the basis of a total loss, or 
requisition for use or hire which results in an insurance 
settlement on the basis of a total loss); or 
(b)	the Aircraft being destroyed, damaged beyond economic 
repair or permanently rendered unfit for normal use for any 
reason whatsoever; or 
(c)	the requisition of title, or other compulsory acquisition 
of title for any reason of the Aircraft by the government 
of the State of Registration or any other authority 
(whether de jure or de facto); or 
(d)	the hijacking, theft, disappearance, condemnation, 
confiscation, seizure, detention or requisition for use or 
hire of the Aircraft which deprives any Person permitted by 
this Agreement to have possession and/or use of the 
Aircraft of its possession and/or use for (i) more than 15 
days (or 30 days in the case of requisition for use or hire 
by the government of the State of Registration) or (ii) if 
earlier, a period ending on the Expiry Date.
EXCUSABLE DELAY means, with respect to delivery of the Aircraft, 
delay or non-performance due to or arising out of acts of God or 
public enemy, civil war, insurrection or riot, fire, flood, 
explosion, earthquake, accident, epidemic, quarantine 
restriction, any act of government, governmental priority, 
allocation, regulation or order affecting directly or 
indirectly, the Aircraft, any manufacturer, Lessor or any 
materials or facilities, strike or labor dispute causing 
cessation, slowdown or interruption of work, inability after due 
and timely diligence to procure equipment, data or materials 
from manufacturers, suppliers, any existing owner, seller or 
lessee in a timely manner, damage, destruction or loss, or any 
other cause to the extent that such cause is beyond the control 
of Lessor, whether above mentioned or not and whether or not 
similar to the foregoing. 
<PAGE>
EXPIRY DATE means the date falling 60 months after the Rent 
Commencement Date, as such day is specified in Lease Supplement 
No. 1, or, if earlier, (i) the date when Lessor, acting in 
accordance with the provisions of this Agreement, terminates the 
leasing of the Aircraft to Lessee under this Agreement, or (ii) 
subject to the provisions of Clauses 11.1(a) and 11.2, the date 
Lessor receives the Agreed Value together with any other amounts 
then due and unpaid under this Agreement and the Other 
Agreements following an Event of Loss; provided that if the Term 
is extended pursuant to Clause 12.2, the Expiry Date shall be 
extended to the date when the Aircraft has been redelivered to 
Lessor in full compliance with this Agreement.
FAA	 means the Federal Aviation Administration of the United 
States of America and any successor thereof. 
FAR	 means the Federal Aviation Regulations set forth in Title 14 
of the United States Code of Federal Regulations, as amended and 
modified from time to time.
FINAL INSPECTION has the meaning given in Clause 1.1 of Schedule 
6.
FINANCIAL INDEBTEDNESS means any indebtedness in respect of:
(a)	moneys borrowed or raised; 
(b)	any liability under any debenture, bond, note, loan stock, 
acceptance, documentary credit or other security; 
(c)	the acquisition cost of any asset to the extent payable 
before or after the time of acquisition or possession; or 
(d)	any guarantee, indemnity or similar assurance against 
financial loss of any person in respect of the above. 
FINANCING PARTIES means the Person or Persons from time to time 
notified by Lessor to Lessee as providing financing to Lessor 
and/or Owner in respect of its acquisition, ownership or leasing 
of the Aircraft, whether by way of superior lease, loan or 
otherwise.
FINANCING STATEMENTS means Uniform Commercial Code Financing 
Statements in respect of the Aircraft  and Engines leased 
hereunder prepared in a form acceptable for filing with the 
applicable Government Entities in the Habitual Base, is subject 
or in whose activities any of the above is a participant. 
<PAGE>
FLIGHT HOUR means each hour or part thereof elapsing from the 
moment the wheels of the Aircraft leave the ground on take off 
until the wheels of the Aircraft next touch the ground.
GAAP means generally accepted accounting principles in the 
United States.
GECAS means either or both of GE Capital Aviation Services, Inc. 
and GE Capital Aviation Services, Limited.
GENEVA CONVENTION means the Convention for the International 
Recognition of Rights in Aircraft, signed (ad referendum) at 
Geneva, Switzerland, on June 19, 1948, and amended from time to 
time, but excluding the terms of any adhesion thereto or 
ratification thereof containing reservations to which the United 
States of America does not accede.
GOVERNING LAW means the Laws of New York, excluding, however, 
the provisions of Section 7-101 of the New York General 
Obligations Law, which the parties have agreed, for avoidance of 
doubt, are inapplicable to this transaction.
GOVERNMENT ENTITY means:
(a)	any national government, political subdivision thereof, or 
local jurisdiction therein; 
(b)	any instrumentality, board, commission, court, or agency of 
any of the above, however constituted; and 
(c)	any association, organization, or institution of which any 
of the above is a member or to whose jurisdiction any 
thereof is subject or in whose activities any of the above 
is a participant.
HABITUAL BASE means the United States.
HOT SECTION REFURBISHMENT means, with respect to any Engine, the 
complete visual inspection and repair as necessary of the 
combustion section of an Engine in an engine repair/overhaul 
station, including (without limitation) complete unstacking of 
the high pressure turbine; complete visual inspection; de-
blading of discs as required; visual inspections of all discs; 
verification that all snap diameters on discs are within limits; 
inspection of all blades for proper chord dimensions and 
cracking; repair or replacement of all blades below minimums; 
inspection and repair of stators as necessary; blade-up of discs 
using new lock plates; assembly of rotors in the turbine; 
balance of all rotors; and installation of rotors in the Engine.
INDEMNITEE means each of Lessor, Owner, GECAS, the Financing 
Parties, Bankers Trust Company, GPA Group plc, Airplanes Limited 
and each of their respective successors and assigns, 
shareholders, subsidiaries, affiliates, partners, contractors, 
directors, officers, servants, agents and employees.
<PAGE>
INSURANCES	 means insurances in respect of the Aircraft in 
form and substance satisfactory to Lessor, and includes (without 
limitation) any insurances and reinsurances required by Schedule 
7.
LANDING GEAR means the landing gear assembly and the life 
limited parts, as defined by the relevant Boeing service letter, 
of the Aircraft excluding any rotable components.
LAW means and includes (a) any statute, decree, constitution, 
regulation, order judgment or other directive of any Government 
Entity; (b) any treaty, pact, compact or other agreement to 
which any Government Entity is a signatory or party; (c) any 
judicial or administrative interpretation or application of any 
Law described in (a) or (b) above; and (d) any amendment or 
revision of any Law described in (a), (b) or (c) above.
LEASE SUPPLEMENT means a Lease Supplement, substantially in the 
form of Schedule 13 hereto, entered into between Lessor and 
Lessee.
LESSEE AFFILIATE means any Subsidiary for the time being of 
Lessee.
LESSEE CONDITIONS PRECEDENT means the Lessee conditions 
specified in Schedule 3.
LESSEE'S MAINTENANCE PROGRAM means the Maintenance Program 
specifically approved by the Air Authority for Lessee's 
maintenance of the Aircraft.
LESSOR CONDITIONS PRECEDENT means the Lessor conditions 
specified in Schedule 3.
LESSOR LIEN means:
(a)	any Security Interest whatsoever from time to time created 
by Lessor or Owner in connection with the financing of the 
Aircraft; 
<PAGE>
(b)	any other Security Interest in respect of the Aircraft 
which results from acts of or claims against Lessor or 
Owner not related to the transactions contemplated by or 
permitted under this Agreement; and 
(c)	any Security Interest in respect of the Aircraft for Lessor 
Taxes. 
LESSOR TAX means any Tax that is:
(a)	imposed solely as the result of activities of Lessor or 
Owner in the jurisdiction imposing the Tax that is 
unrelated to Lessor's dealings with Lessee or the 
transactions contemplated by this Agreement or the 
operation of the Aircraft by Lessee; or
(b)	imposed on or measured by the net income, profits or gains 
of Lessor or Owner including, without limitation, minimum 
taxes and taxes on tax preference items and taxes which are 
capital, doing business, franchise, excess profits, or net 
worth taxes and interest, additions to tax, penalties or 
other charges in respect thereof by any Government Entity 
in the United State of America; or
(c)	imposed solely as the result of an event that occurs prior 
to the Delivery Date or subsequent to the Return Occasion 
and that is unrelated to Lessor's dealings with Lessee or 
to the transactions contemplated by this Agreement; or 
(d)	imposed on or with respect to a Tax Indemnitee resulting 
from a Tax Indemnitee's gross negligence, willful 
misconduct, breach of this Lease, or misrepresentation; or 
(e)	any taxes resulting from or attributable to a Lessor Lien; 
or
(f)	any Taxes in the nature of a withholding tax imposed as a 
result of a Tax Indemnitees not being a United States 
person within the meaning of Internal Revenue Code Section 
7701(a)(30); or 
(g) 	any interest, penalties, or additions to tax imposed on a 
Tax Indemnitee attributable to the failure of a Tax 
Indemnitee to properly and timely file any return unless 
such failure was due to (1) the failure of the Lessee to 
notify the Tax Indemnity of any tax filing or reporting 
requirement that was due to the place of use or operation 
of the Aircraft or the location of Lessee, or (2) the 
failure of the Lessee to provide to the Tax Indemnitee any 
information required for the filing of such return.
LETTER OF CREDIT means the letter of credit issued pursuant to 
Clause 5.12 and any replacement or renewal of that letter of 
credit.
<PAGE>
LOSSES means any claims, proceedings, losses, liabilities, 
damages (whether direct, indirect, special, incidental or 
consequential) , suits, judgments, costs, expenses, fees, 
penalties or fines (whether civil or criminal) of every nature 
and kind, including any of the foregoing arising or imposed with 
or without any Indemnitee's fault or negligence, whether passive 
or active or under the doctrine of strict liability.
MAINTENANCE PERFORMER means such Person as is approved by the 
FAA to perform maintenance and/or modification services on 
commercial aircraft and/or commercial aircraft engines, which 
Person shall be agreed by Lessee and Lessor to have recognized 
standing and experience, suitable facilities, and suitable 
equipment to perform such services on aircraft and/or engines of 
the same or improved model as the Aircraft or, in the case of 
engines, the Engines.
MAINTENANCE PROGRAM means an Air Authority approved maintenance 
program for the Aircraft in accordance with the Manufacturer's 
specifications, service bulletins, planning documents, 
maintenance manuals and documents and encompassing scheduled 
maintenance (including block maintenance), condition monitored 
maintenance, and/or on-condition maintenance of Airframe, 
Engines and Parts, including but not limited to, servicing, 
testing, preventive maintenance, repairs, structural 
inspections, system checks, overhauls, approved modifications, 
service bulletins, engineering orders, airworthiness directives, 
corrosion control, inspections and treatments. 
MAJOR CHECKS means any C-Check, multiple C-Check, D-Check, Q-
Check or annual heavy maintenance visit or segment thereof 
suggested by its manufacturer and approved by the FAA for 
commercial aircraft of the same model as the Aircraft (however 
denominated) as set out in the Agreed Maintenance Program. 
MANUFACTURER means Boeing. 
MANUFACTURER'S MAINTENANCE PLANNING DOCUMENT means the 
recommended maintenance program for the Aircraft issued by the 
Manufacturer. 
MINOR CHECKS means any A-Check or B-Check.
MITIGATION CREDIT has the meaning given in Clause 13.4.
OWNER means Emerald Aviation Investments Limited.
PART means, whether or not installed on the Aircraft:
<PAGE>
(a)	any component, furnishing or equipment (other than a 
complete Engine) furnished with the Aircraft on the 
Delivery Date; and 
(b)	any other component, furnishing or equipment (other than a 
complete Engine), with effect from the time when title 
thereto has passed to Owner pursuant to this Agreement; 
but excludes any such items title to which should have passed to 
Lessee pursuant to this Agreement. 
PART 36 OR FAR PART 36 means Part 36 of the FAR, as amended or 
modified from time to time.
PART 121 OR FAR PART 121 means Part 121 of the FAR, as amended 
or modified from time to time.
PERMITTED LIEN means:
(a)	any lien for Taxes not assessed or, if assessed, not yet 
due and payable, or being contested in good faith by 
appropriate proceedings; 
(b)	any lien of a repairer, mechanic, carrier, hangarkeeper or 
other similar lien arising in the ordinary course of 
business by operation of Law in respect of obligations 
which are not overdue or are being contested in good faith 
by appropriate proceedings; 
but only if (in the case of both (a) and (b)) (i) adequate 
reserves have been provided by Lessee for the payment of 
the Taxes or obligations; and (ii) such proceedings, or the 
continued existence of the lien, do not give rise to any 
likelihood of the sale, forfeiture or other loss of the 
Aircraft or any interest therein or of criminal liability 
on Lessor or Owner; and 
(c)	any Lessor Lien. 
PERSON means any individual person, corporation, partnership, 
firm, joint stock company, joint venture, trust, estate, 
unincorporated organization, association, Government Entity, or 
organization or association of which any of the above is a 
member or a participant.
"Q" CHECK means a "Q" Check in accordance with Lessee's 
Maintenance Program as in effect on the Delivery Date.
<PAGE>
REDELIVERY LOCATION means a location within 3,500 nautical miles 
of Kansas City, Missouri or such other airport as may be agreed 
in writing by Lessor and Lessee.
RENT means all amounts payable pursuant to Clause 5.3. 
RENTAL PERIOD means each period ascertained in accordance with 
Clause 5.2. 
RENT COMMENCEMENT DATE means the date on which Lessor validly 
tenders the Aircraft for Delivery to Lessee under Clause 4.1.
RENT DATE	 means the first day of each Rental Period. 
REPLACEMENT ENGINE means an engine of the same manufacturer and 
model, and having equivalent value, utility, modification 
status, time elapsed since Hot Section Refurbishment and Cold 
Section Refurbishment and remaining warranty status as the 
Engine it is intended to replace under Clause 11.1(d), or, at 
Lessee's option, an engine of the same manufacturer as such 
Engine but of an improved model, and otherwise of an equivalent 
value and utility and suitable for installation and use on the 
Airframe without impairing the value or utility of the Airframe 
and compatible with the remaining installed Engine.
REQUIRED LC EXPIRY DATE means the date being 90 days after the 
Expiry Date.
RETURN OCCASION means the date on which the Aircraft is 
redelivered to Lessor in accordance with Clause 12.
SALES TAXES has the meaning given in Schedule 11, Paragraph 2.
SCHEDULED DELIVERY DATE means January 31, 1999.
SECURITY INTEREST means any mortgage, charge, pledge, lien, 
encumbrance, assignment, hypothecation, right of set-off, right 
of detention  or any other agreement or arrangement having the 
effect of conferring security.
STATE OF INCORPORATION means Delaware.
STATE OF REGISTRATION means the United States of America.
<PAGE>
SUBSIDIARY means:
(a) 	in relation to any reference to accounts, any company whose 
accounts are consolidated with the accounts of Lessee in 
accordance with GAAP; or 
(b)	for any other purpose, an entity from time to time 
(i)		of which another has direct or indirect control or 
owns directly or indirectly more than 50 percent of 
the voting share capital; or 
(ii)	 	which is a direct or indirect subsidiary of 
another under the Laws of the jurisdiction of its 
incorporation. 
SUPPLEMENTAL RENT means all amounts payable by Lessee pursuant 
to Clause 5.4 and under Clause 4 of Schedule 10.
TAXES means any and all present and future taxes, duties, 
withholdings, levies, assessments, imposts, fees and other 
governmental charges of all kinds together with any penalties, 
fines, surcharges and interest thereon and any additions 
thereto. 
TAX INDEMNITEES means Owner, Lessor  and each Financing Party.
TERM	 means the period commencing on the Delivery Date and ending 
on the Expiry Date. 
U.S.C. 	means the United States Code.
UNWIND EXPENSES has the meaning given in Clause 13.2(c)(iv).
YEAR 2000 COMPLIANCE has the meaning given in Clause 17.1(c).
The definitions of certain words and expressions which pertain 
to confidential and proprietary provisions of the Agreement have 
the respective meanings set forth in Clause 2 of Schedule 10.
<PAGE>
SCHEDULE 2

REPRESENTATIONS AND WARRANTIES
1.1 Lessee's Representations and Warranties
Lessee's representations and warranties to Lessor are as 
follows:
(a) STATUS:  Lessee is a corporation duly incorporated and 
validly existing in good standing under the Laws of the 
State of Incorporation and has the corporate power to own 
its assets and carry on its business as it is being 
conducted and is the holder of all necessary air 
transportation licenses required in connection therewith 
and with the use and operation of the Aircraft; 
(b) POWER AND AUTHORITY:  Lessee has the corporate power to 
enter into and perform, and has taken all necessary 
corporate action to authorize the entry into, performance 
and delivery of, this Agreement and the transactions 
contemplated by this Agreement; 
(c) LEGAL VALIDITY:  this Agreement has been duly authorized, 
executed and delivered by Lessee, and constitutes a legal, 
valid and binding obligation of Lessee, enforceable in 
accordance with its terms, except as may be limited by 
applicable bankruptcy, insolvency, reorganization, 
moratorium or other similar Laws affecting the enforcement 
of creditors' rights generally, and, by such principles of 
equity (regardless of whether such enforceability is 
considered in a proceeding in equity or at law) as a court 
having jurisdiction may impose and by Laws which may affect 
some of such remedies but which do not make the available 
remedies inadequate for the substantial realization of the 
benefits provided herein; 
(d) NON-CONFLICT:  the entry into and performance by Lessee of, 
and the transactions contemplated by, this Agreement do not 
and will not:
(i) conflict with any Laws binding on Lessee; or 
(ii) conflict with the constitutional documents of Lessee; 
or 
<PAGE>
(iii) conflict with or result in default under any 
agreement or instrument which is binding upon Lessee 
or any of its assets nor result in the creation of any 
Security Interest over any of its assets; 
(e) AUTHORIZATION: so far as concerns the obligations of 
Lessee, all authorizations, consents, registrations and 
notifications required in connection with the entry into, 
performance, validity and enforceability of, this Agreement 
and the transactions contemplated by this Agreement, have 
been (or will on or before the Delivery Date have been) 
obtained or effected (as appropriate) and are (or will on 
their being obtained or effected be) in full force and 
effect; 
(f) INTENTIONALLY LEFT BLANK
(g) MATERIAL ADVERSE CHANGE:  there has been no material 
adverse change in the consolidated financial condition of 
Lessee and the Lessee Affiliates or the financial condition 
of Lessee and the Lessee Affiliates since the date to which 
the accounts most recently provided to Lessor on or prior 
to the Delivery Date were drawn up; 
(h) LITIGATION:  no litigation, arbitration or administrative 
proceedings are pending or to Lessee's knowledge threatened 
against Lessee or any Lessee Affiliate which, if adversely 
determined, would have a material adverse effect upon 
Lessee's financial condition or business or Lessee's 
ability to perform its obligations under this Agreement; 
(i) PARI PASSU:  the obligations of Lessee under this Agreement 
rank at least pari passu with all other present and future 
unsecured and unsubordinated obligations (including 
contingent obligations) of Lessee, with the exception of 
such obligations as are mandatorily preferred by Law and 
not by virtue of any contract; 
(j) CHIEF EXECUTIVE OFFICE:  Lessee's chief executive office 
(as that term is defined in Article 9 of the Uniform 
Commercial Code as in effect in the State of Kansas) is 
located at 533 Mexico City Avenue, Kansas City, Missouri  
64153 and the records of the Lessee concerning the Aircraft 
are maintained at such chief executive office;
(k) CERTIFICATED AIR CARRIER:  Lessee is a Certificated Air 
Carrier and Lessee will not take a position adversely 
effecting Lessor, as lessor of the Aircraft to Lessee, 
under Section 1110 of Title 11 of the United States Code 
with respect to the Aircraft; and
<PAGE>
(l) CITIZEN OF THE UNITED STATES:  Lessee is a "citizen of the 
United States" as defined in Section 40102 of Title 49 of 
the United States Code.
1.2 Lessee's Further Representations and Warranties
Lessee's further representations and warranties to Lessor 
are as follows:
(a) ACCOUNTS: the audited consolidated accounts of Lessee and 
the Lessee Affiliates most recently delivered to Lessor, 
including the balance sheets and statements of income and 
retained earnings:
(i) have been prepared in accordance with GAAP; and 
(ii) fairly represent the consolidated financial condition 
and operations of Lessee and the Lessee Affiliates as 
at the date to which they were drawn up;
(iii) NO DEFAULT:  No Default has occurred and is 
continuing or might result from the entry into or 
performance of this Agreement; 
(b) REGISTRATION: 
(i) except for the filing for recordation of this 
Agreement and a Lease Supplement with the FAA, and the 
filing of any Uniform Commercial Code financing 
statements required (and continuation statements at 
periodic intervals), no further filing or recording of 
this Agreement or of any other document (including any 
financing statement under Article 9 of the Uniform 
Commercial Code) and no further action, is or will be 
necessary under the Laws of the United States of 
America, the State of Incorporation, the State of 
Registration, and the Habitual Base or any other 
states in order to (A) fully establish, perfect and 
protect Owner's title to, and the interests of Lessor 
and Owner in, the Aircraft or any Engine or Part as 
against Lessee or any third party, or (B) ensure the 
validity, effectiveness and enforceability of this 
Agreement or any other Operative Document to which the 
Lessee is a party; and
<PAGE>
(ii) under the Laws of the State of Incorporation, the 
State of Registration and the Habitual Base the 
property rights of Lessor and Owner in the Aircraft 
have been fully established, perfected and protected;
(c) TAXES:  Lessee has delivered all necessary returns and 
payments due to the tax authorities in the State of 
Incorporation, the State of Registration and the Habitual 
Base and all other jurisdictions in which Lessee is 
required to pay Taxes and/or file tax returns or reports 
and Lessee is not required by Law to deduct any Taxes from 
any payments under this Agreement; 
(d) FULL DISCLOSURE:  each of this Agreement and any other 
document, certificate or statement (excluding any 
forecasts, plans and projections) furnished to Lessor by or 
on behalf of Lessee in connection with the transactions 
contemplated hereby (including without limitation financial 
information) does not contain any untrue statement of a 
material fact or omit to state a material fact necessary in 
order to make the statements contained herein and therein 
not misleading; all forecasts and opinions contained 
therein were honestly made on reasonable grounds after due 
and careful inquiry by Lessee; 
(e) ERISA:  Lessee is not engaged in any transaction in 
connection with which it could be subjected to either a 
civil penalty assessed pursuant to Section 502 of ERISA or 
any tax imposed by Section 4975 of the Internal Revenue 
Code; no material liability to the Pension Benefit Guaranty 
Corporation has been or is expected by Lessee to be 
incurred with respect to any employee pension benefit plan 
(as defined in Section 3 of ERISA) maintained by Lessee or 
by any trade or business (whether or not incorporated) 
which together with Lessee would be treated as a single 
employer under Section 4001 of ERISA and Section 414 of the 
Internal Revenue Code; there has been no reportable event 
(as defined in Section 4043(b) of ERISA) with respect to 
any such employee pension benefit plan; no notice of intent 
to terminate any such employee pension benefit plan has 
been filed or is expected to be filed, nor has any such 
employee pension benefit been terminated; no circumstance 
exists or is anticipated that constitutes or would 
constitute grounds under Section 4042 of ERISA for the 
Pension Benefit Guaranty Corporation to institute 
proceedings to terminate, or to appoint a trustee to manage 
the administration of, such an employee pension benefit 
plan; and no accumulated funding deficiency (as defined in 
Section 302 of ERISA or Section 412 of the Internal Revenue 
Code), whether or not waived, exists with respect to any 
such employee pension benefit plan.
<PAGE>
1.3 Lessor's Representations and Warranties:  
Lessor's representations and warranties to Lessee are as 
follows:
(a) STATUS:  Lessor is a corporation duly incorporated, validly 
existing and in good standing under the Laws of Connecticut 
and has the corporate power to own its assets and carry on 
its business as it is now being conducted; 
(b) POWER AND AUTHORITY:  Lessor has the corporate power to 
enter into and perform, and has taken all necessary 
corporate action to authorize the entry into, performance 
and delivery of, this Agreement and the transactions 
contemplated by this Agreement; 
(c) LEGAL VALIDITY:  this Agreement has been duly authorized, 
executed and delivered by Lessor and constitutes Lessor's 
legal, valid and binding obligation enforceable in 
accordance with its terms except as may be limited by 
applicable bankruptcy, insolvency, reorganization, 
moratorium or other similar Laws affecting the enforcement 
of creditors' rights generally, and, by such principles of 
equity (regardless of whether such enforceability is 
considered in a proceeding in equity or at law) as a court 
having jurisdiction may impose and by Laws which may affect 
some of such remedies but which do not make the available 
remedies inadequate for the substantial realization of the 
benefits provided herein; 
<PAGE>
(d) NON-CONFLICT:  the entry into and performance by Lessor of, 
and the transactions contemplated by, this Agreement do not 
and will not:
(i) conflict with any Laws binding on Lessor; or 
(ii) conflict with the constitutional documents of Lessor; 
or  
(iii) conflict with or result in default under any 
agreement or instrument which is binding upon Lessor 
or any of its assets nor result in the creation of any 
Security Interest over any of its assets (other than 
this Agreement); 
(e) AUTHORIZATION:  so far as concerns the obligations of 
Lessor, all authorizations, consents, registrations and 
notifications required under the Governing Law or the laws 
of Lessor's state of incorporation in connection with the 
entry into, performance, validity and enforceability of, 
and the transactions contemplated by, this Agreement by 
Lessor have been (or will on or before the Delivery Date 
have been) obtained or effected (as appropriate) and are 
(or will on their being obtained or effected be) in full 
force and effect; 
(f) RIGHT TO LEASE:  on the Delivery Date, Lessor shall have 
the right to lease the Aircraft to Lessee in accordance 
with the terms hereof;
(g) CITIZENSHIP:  Lessor is a "citizen of the United States" as 
defined in Section 40102 of Title 49 of the United States 
Code.
<PAGE>
SCHEDULE 3

CONDITIONS PRECEDENT
1. LESSEE CONDITIONS PRECEDENT
The conditions precedent to Lessor's obligation to deliver and 
to commence the leasing of the Aircraft are as follows. 
1.1 PRELIMINARY CONDITIONS
Lessor will receive from Lessee not later than two Business Days 
prior to the Scheduled Delivery Date each of the following in 
form and substance satisfactory to Lessor:
(a) OPINION:  evidence that an opinion in the form of Schedule 
8 will be issued on the Delivery Date by independent legal 
counsel acceptable to Lessor in the State of Registration, 
the Habitual Base and the State of Incorporation; 
(b) FAA OPINION:  evidence that there will be issued an opinion 
of Daugherty, Fowler, Peregrin & Haught in a form 
acceptable to Lessor as to the due filing for recordation 
of this Agreement;
(c) APPROVALS:  evidence of the issue of each approval, license 
and consent which may be required in relation to, or in 
connection with the performance by Lessee of any of its 
obligations hereunder;
(d) IMPORT:  evidence that any required import license, and all 
customs formalities, relating to the import of the Aircraft 
into the Habitual Base have been obtained or complied with, 
and that the import of the Aircraft into the Habitual Base 
is exempt from Taxes;
(e) LICENSES:  copies of Lessee's air transport license, air 
operator's certificates and all other licenses, 
certificates and permits required by Lessee in relation to, 
or in connection with, the operation of the Aircraft; 
(f) PROCESS AGENT:  a letter from the process agent appointed 
by Lessee in this Agreement accepting that appointment; 
(g) CERTIFICATE OF LEASE TERMINATION:  a certificate of lease 
termination executed by a duly authorized officer of 
Lessee, substantially in the form of Schedule 12 to this 
Agreement, acknowledging that this Agreement is no longer 
in effect with respect to the Aircraft and Engines, which 
certificate Lessor will hold in escrow to be filed at the 
FAA upon the expiration or other termination of this 
Agreement; and
<PAGE>
(h) GENERAL: such other documents as Lessor may reasonably 
request; 
1.2 FINAL CONDITIONS
(a) FINAL DOCUMENTS:  Lessor shall receive on or before the 
Delivery Date each of the following:
(i) CERTIFICATE OF TECHNICAL ACCEPTANCE:  the Certificate 
of Technical Acceptance, dated and fully completed, 
and executed by Lessor and Lessee, certifying that 
Lessee has completed its inspection of the Aircraft in 
accordance with Clause 4.5 and that the Aircraft 
conforms to the provisions set forth all therein and 
is in all respects acceptable to Lessee, or if not so 
acceptable, then setting forth discrepancies and 
corrective action to be taken;  
(ii) LEASE SUPPLEMENT:  in the form of Schedule 13 hereto, 
to be dated the Delivery Date, fully completed and 
executed by Lessor and Lessee, and filed for recording 
at the FAA;
(iii) OPINIONS: a signed original of each of the 
opinions referred to in 1.1(a) and 1.1(b) above, which 
shall be dated the Delivery Date; 
(iv) PAYMENTS:  all sums due to Lessor under this Agreement 
on or before the Delivery Date; 
(v) INSURANCES: certificates of insurance, an opinion and 
undertaking from Lessee's insurance broker and other 
evidence satisfactory to Lessor that Lessee is taking 
the required steps to ensure due compliance with the 
provisions of this Agreement as to Insurances with 
effect on and after the Delivery Date; 
(vi) ACCOUNTS: the latest available accounts of Lessee as 
described in Clause 8.2(b)(i) and (ii); 
(vii) LESSEE'S MAINTENANCE PROGRAM:  such information 
and documents relating to Lessee's Maintenance Program 
as Lessor may require; 
<PAGE>
(viii) FILINGS:  evidence on the Delivery Date that the 
Financing Statements have been duly filed and that all 
filings, registrations, recordings and other actions 
have been or will be taken which are necessary or 
advisable to ensure the validity, effectiveness and 
enforceability of this Agreement and to protect the 
property rights of Lessor and Owner in the Aircraft, 
any Engine or any Part; and
(ix) GENERAL: such other documents as Lessor may reasonably 
request;
(b) REPRESENTATIONS/WARRANTIES:  the representations and 
warranties of Lessee in Schedule 2 shall be correct, and 
would be correct if repeated on Delivery; and 
(c) NO DEFAULT:  no Default shall have occurred and be 
continuing on Delivery or might result from the leasing of 
the Aircraft to Lessee under this Agreement. 
2. LESSOR CONDITIONS PRECEDENT
The conditions precedent to Lessee's obligation to accept 
delivery and commence the leasing of the Aircraft are as 
follows:
2.1 REPRESENTATIONS/WARRANTIES:  the representations and 
warranties of Lessor in Schedule 2 shall be correct, and 
would be correct if repeated on Delivery; and
2.2 DELIVERY CONDITIONS REQUIREMENTS:  the Delivery Condition 
Requirements in Part 2 of Schedule 4 shall be satisfied on 
Delivery.
<PAGE>
SCHEDULE 4

PART 1

DESCRIPTION OF AIRCRAFT
AIRCRAFT 
Manufacturer:				Boeing
Model:					737-200A
Serial Number:			22979
FAA Registration Number:		__________________ 
ENGINES 
Engine Type:				Pratt & Whitney JT8D-15
Serial Nos:				708303 and 702951
<PAGE>
PART 2

DELIVERY CONDITION REQUIREMENTS
1.1 GENERAL CONDITION 
The Aircraft will:
(a) be in good operating condition and be clean by scheduled 
airline standards, and all structural damage shall have 
been repaired to a permanent standard and a coach class 
configuration with 110 seats; 
(b) have installed the full complement of equipment, parts, 
accessories, furnishings and loose equipment as normally 
installed in the Aircraft for continued regular service, 
and be in a condition suitable for immediate operations; 
(c) have in existence a valid certificate of airworthiness (or 
if required, a valid export certificate of airworthiness) 
with respect to the Aircraft issued by the Hungarian Air 
Authority; 
(d) comply with the manufacturer's original specifications as 
at the Delivery Date; 
(e) have undergone, immediately prior to Delivery, a "C" Check 
in block format so that all Airframe inspections falling 
due within the next following 3,000 Flight Hours and 1 year 
of operation in accordance with the Manufacturer's 
Maintenance Planning Document, have been accomplished; 
(f) have had accomplished all outstanding Airworthiness 
Directives affecting that model of Aircraft issued by the 
FAA which, if the Aircraft were registered with the FAA, 
would have to be complied with during the Term or within 90 
days after the Delivery Date; for this purpose, compliance 
shall be by terminating action if:
(i) Lessee has complied by terminating action for other 
aircraft of the same model and series then operated by 
Lessee; or
(ii) the latest date permitted by such Airworthiness 
Directive for compliance by terminating action falls 
within 90 days after the Delivery Date;
<PAGE>
(g) have installed all applicable vendor's and manufacturer's 
service bulletin kits received free of charge by Lessor 
that are appropriate for the Aircraft and to the extent not 
installed, those kits will be furnished free of charge to 
Lessor; 
(h) be in Lessee's livery;
(i) have all signs and decals clean, secure and legible; and
(j) have no open, deferred, continued, carry over or placarded 
log book items.
1.2 COMPONENTS 
(a) Each Flight Hour and Cycle controlled Hard Time Component 
(other than the APU) shall have not less than 3,000 Flight 
Hours of life remaining to the next scheduled removal in 
accordance with the prior lessee's  Maintenance Program and 
shall be supported by appropriate certification 
documentation indicating TSN, CSN, TSO and CSO such as JAR 
form 1 or FAA form 8130-1; for this purpose "Hard Time 
Component" means any component which has a limited on-wing 
life in accordance with the prior lessee's Maintenance 
Program and which can have life fully restored through 
appropriate maintenance;
(b) Each calendar-limited component including safety equipment 
will have not less than 12 months life remaining to the 
next scheduled removal in accordance with the prior 
lessee's Maintenance Program;
(c) Each "on-condition" and "condition-monitored" component 
will be serviceable;
(d) The installed components as a group will have an average of 
total flight time since new of not more than that of the 
Airframe; 
(e) Each Airframe Life-Limited Component will have not less 
than 3,000 Flight Hours remaining to the next scheduled 
removal and will be supported by certification 
documentation necessary to demonstrate back-to-birth 
traceability; for this purpose "Airframe-Life Limited 
Component" means a component with an ultimate life which 
cannot be restored through appropriate maintenance.
<PAGE>
1.3 ENGINES 
Each Engine will be installed on the Aircraft and comply 
with the following:
(a) Each Engine will have not less than 3,500 Flight Hours 
expected life remaining to the next scheduled removal.  The 
expected life remaining will be determined by the 
inspection and checks accomplished by Lessor in accordance 
with this Agreement;
(b) Each Engine shall have just completed at the Delivery 
Location for Lessee's acceptance a hot (including 
combustion chamber) and cold section video borescope 
inspection, which inspection shall be performed at Lessee's 
expense, and a power assurance run performed at Lessor's 
expense in accordance with the Manufacturer's maintenance 
manual and any defects discovered in such inspections which 
exceed the Engine manufacturer's in-service limits shall be 
corrected at Lessor's expense.  Lessor shall cause such 
borescope inspections to be performed and to be recorded on 
videotape by an agency selected by Lessee and shall provide 
Lessee with a copy of such videotape on the Delivery Date.  
No Engine shall be on "watch" for any reason requiring any 
special or out of sequence inspection.  Each such Engine 
shall comply with the operations specification of Lessee 
without waiver or exceptions.  All items beyond the Engine 
manufacturer's in-service limits shall be repaired; and 
(c) Each Engine will have no defect which places less than 
3,500 Flight Hours of remaining life pursuant to 
Manufacturer's or airworthiness requirements until removal. 
1.4 FUSELAGE, WINDOWS AND DOORS 
(a) The fuselage will be free of major dents and abrasions, 
loose or pulled or missing rivets, and all structural 
repairs shall be permanent repairs and in accordance with 
FAA approved data;
(b) Windows will be free of delamination, blemishes, crazing 
and will be properly sealed and within the Manufacturer's 
specifications; and
(c) Doors will be free moving, correctly rigged and be fitted 
with serviceable seals. 
<PAGE>
1.5 WINGS AND EMPENNAGE 
(a) Leading edges will be free from damage; and
(b) Unpainted surfaces will be polished.
1.6 INTERIOR AND COCKPIT
Carpets and seat covers will be in good condition, clean 
and free of stains and meet FAR fire resistance 
regulations.
1.7 LANDING GEAR; WHEELS AND BRAKES
(a) The Landing Gear and wheel wells will be clean, free of 
leaks and repaired as necessary.  
(b) Each installed Landing Gear shall have no more Cycles 
accumulated than the Airframe and shall have not less than 
5,000 Flight Hours/3,000 Cycles and 18 months life 
remaining to the next scheduled removal in accordance with 
the Manufacturer's Maintenance Planning Document.
(c) The wheels and brakes will have not less than half of their 
useful life remaining.
1.8 RETURN OF AUXILIARY POWER UNIT (APU)
The APU shall have just completed a borescope inspection 
and shall meet all air outputs and temperature limitations 
under load in accordance with the Manufacturer's 
maintenance manual, and any defects discovered in such 
inspection, which exceed the APU manufacturer's in service 
limits, shall be corrected at Lessor's expense.  The number 
of Flight Hours of APU operation to the next hot section 
inspection shall be no greater than 2,000 Flight Hours.
1.9 CORROSION 
(a) The Aircraft shall be in compliance with the Manufacturer's 
corrosion prevention and control program (CPCP) 
requirements.  All CPCP inspections which would normally be 
accomplished while access is provided during structural 
inspection in accordance with the prior lessee's 
Maintenance Program during the Term shall have been 
accomplished;
<PAGE>
(b) The entire fuselage will be substantially free from 
corrosion and will be adequately treated and a corrosion 
prevention program approved by the Manufacturer will be in 
operation; and
Fuel tanks will be free from contamination and corrosion and a 
tank treatment program will be in operation.
<PAGE>
SCHEDULE 5

CERTIFICATE OF TECHNICAL ACCEPTANCE 
This Certificate of Technical Acceptance (this "Certificate") is 
delivered, on the date set out below by Vanguard Airlines, Inc. 
("Lessee"), to AeroUSA, Inc. ("Lessor"), pursuant to the 
Aircraft Lease Agreement dated as of January 5, 1999 between 
Lessor and Lessee (the "Agreement"). The capitalized terms used 
in this Certificate shall have the meaning given to such terms 
in the Agreement. 
1. DETAILS OF ACCEPTANCE 
Lessee hereby confirms to Lessor that Lessee has at [   ] 
o'clock on this [   ] day of [   ], 1999, at [   ], technically 
accepted the following, in accordance with the provisions of the 
Agreement:
(a) Boeing Model 737-200A airframe, Manufacturer's Serial No. 
22979;
(b) Pratt & Whitney JT8D-15 Engines:
Engine Manufacturer's Serial No. 
1)	708303;
2)	702951;
(Each of which shall have more than 750 rated takeoff 
horsepower or the equivalent of such horsepower);
(c) Fuel on Board as of the date of this 
Certificate:____________________; 
(d) Loose Equipment Check List: as set forth below or as per 
list signed by Lessor and Lessee and attached hereto; and
(e) Aircraft Documents:  as per list signed by Lessor and 
Lessee and attached hereto.
2. HOURS AND CYCLES DATA (as of Delivery Date)
(a) Airframe:
Number of Hours since last phase "D" Check (Heaviest Check):
	______ hours
<PAGE>
"C" Check (or Equivalent):
Interval:  ___________________________
Time Since:  _______________________
(b) LANDING GEAR OVERHAUL:
Number of Cycles Since Last Overhaul:
Left Gear __________________________ cycles/hours
Right Gear _________________________ cycles/hours
Nose Gear _________________________ cycles/hours
Center Gear ________________________ cycles/hours
Interval: Left Gear _________________________
Right Gear _________________________
Nose Gear _________________________
Center Gear ________________________ 
(c) ENGINES:
Number of Hours Since Last Heavy Shop Visit:
S/N            :______ hours
S/N            :______ hours
Number of Hours Since Last Hot Section Refurbishment:
S/N            :______ hours
S/N            :______ hours
Number of Hours Since Last Cold Section Refurbishment:
S/N            :______ hours
S/N            :______ hours
Hot Section Inspection:
Interval:  ___________________________
<PAGE>
Time Since (S/N               ):  
__________________________
Time Since (S/N               ):  
__________________________
Time Remaining to First Restriction:
Engine S/N:	708303 
Hours:	__________	Restriction:	__________
Cycles:	__________	Restriction:	__________
Engine S/N:	702951
Hours:	__________	Restriction:	__________
Cycles:	__________	Restriction:	__________
Average Cycles in Life Limited Parts (see attached 
Schedule):
Engine S/N:  708303 _________
Engine S/N:  702951 _________
(d) AUXILIARY POWER UNIT:
Number of APU Hours Since Last Heavy Shop Visit:
__________ hours	Date accomplished __________
Hot Section Inspection:
Interval:	________________________
Time Since:	________________________
(e) TIME CONTROLLED COMPONENTS: 	[See attached DUJX Report]
(f) INTERIOR EQUIPMENT:
Number of Passenger Seats and Configuration:_______________ 
____________________
Number of Galleys and Location:	_________	__________
Number of Lavatories and Location:	 _________	_________
<PAGE>
LOPA - Attached			__________	__________
List of Loose Equipment on Board:
______________________________________	_________________
______________________________________	_________________
______________________________________	_________________
______________________________________	_________________
______________________________________	_________________
______________________________________	_________________
(g) AVIONICS:
DESCRIPTION						MODEL		PART 
NO.
______________________________________	_________
	___________
______________________________________	_________
	___________
______________________________________	_________
	___________
______________________________________	_________
	___________
______________________________________	_________
	___________
______________________________________	_________
	___________
(h) [	VIDEO SYSTEM:
Projector	_________________________________________
Tape Reproducer_______________________________________
System Control Unit____________________________________
System Monitor________________________________________]
<PAGE>
3. ACCEPTANCE:
Lessee hereby confirms that the Aircraft, Engines, Parts 
and Aircraft Documents are technically acceptable to it, 
satisfy all of the Delivery Condition Requirements and are 
in the condition for delivery and acceptance as required 
under the Agreement.





IN WITNESS WHEREOF, Lessee and Lessor have, by their duly 
authorized representative, executed this Certificate on the date 
in paragraph 1 above. 
LESSEE:  VANGUARD AIRLINES, INC.
By:	_________________________ 
Title:	_________________________ 
LESSOR:  AEROUSA, INC.
By:	_________________________ 
Title:	_________________________ 
<PAGE>
SCHEDULE 6

PROCEDURES AND OPERATING CONDITION AT REDELIVERY
On the Return Occasion the Aircraft, subject to fair ordinary 
wear and tear of a kind and to an extent consistent with similar 
aircraft engaged in commercial airline operations, will be 
redelivered to Lessor by Lessee in accordance with the 
procedures and in any event in the condition set out below.
1.1 FINAL INSPECTION
Immediately prior to the Return Occasion, Lessee will make the 
Aircraft available to Lessor for inspection ("Final Inspection") 
in order to verify that the condition of the Aircraft complies 
with this Agreement. The Final Inspection will permit, and be 
long enough for, Lessor to:
(a)	inspect the Aircraft Documents; 
(b)	inspect the Aircraft and uninstalled Parts; 
(c)	inspect the Engines, including without limitation (i) a 
complete video borescope inspection, to be completed at 
Lessor's sole cost and expense, of (A) the low pressure and 
high pressure compressors and (B) turbine area and (ii) 
engine condition runs; and
(d)	observe a 2 hour demonstration flight at Lessee's cost 
(with Lessor's representatives as on-board observers). 
Lessor will indemnify and hold harmless Lessee on an After-
Tax Basis from and against all Losses arising from death or 
injury to any observer or any employee of Lessor in 
connection with any such demonstration flight of the 
Aircraft by Lessor.
1.2 GENERAL CONDITION 
The Aircraft will:
(a)	be in good operating condition and be clean by scheduled 
airline standards, and all structural damage shall have 
been repaired to a permanent standard and in the 
configuration as modified at the FAA approved maintenance 
facility indicated in the notice delivered pursuant to 
Clause 7.4, or as otherwise agreed upon by Lessor and 
Lessee; 
<PAGE>
(b)	have installed the full complement of equipment, parts, 
accessories, furnishings and loose equipment as when 
originally delivered to Lessee and as normally installed in 
the Aircraft for continued regular service, and be in a 
condition suitable for immediate operations under FAR Part 
121 as then in effect without waiver or restriction; and if 
any of the engines tendered for redelivery with the 
Aircraft is not one of the Engines referred to in the 
Acceptance Certificate or a Replacement Engine installed 
pursuant to Clause 11.1(d) following an Engine Event of 
Loss, Lessor shall have no obligation to accept such engine 
unless Lessee furnishes to Lessor all the documents and 
evidence in respect of such engine specified in Clause 
11.1(d), as if such engine were a Replacement Engine;
(c)	have in existence a valid certificate of airworthiness (or 
if required by Lessor, a valid export certificate of 
airworthiness) with respect to the Aircraft issued by the 
Air Authority; 
(d)	comply with the manufacturer's original specifications as 
at the Delivery Date; 
(e)	have undergone, immediately prior to redelivery, a "C" 
Check in block format so that all Airframe inspections 
falling due within the next following 3,000 Flight Hours 
and 1 year of operation in accordance with the 
Manufacturer's Maintenance Planning Document, have been 
accomplished; 
(f)	have had accomplished all outstanding Airworthiness 
Directives affecting that model of Aircraft issued by the 
FAA which, if the Aircraft were registered with the FAA, 
would have to be complied with during the Term or within 90 
days after the Expiry Date; for this purpose, compliance 
shall be by terminating action if:
(i) Lessee has complied by terminating action for other 
aircraft of the same model and series then operated by 
Lessee; or
(ii) the latest date permitted by such Airworthiness 
Directive for compliance by terminating action falls 
within 90 days after the Expiry Date;
<PAGE>
(g)	have installed all applicable vendor's and manufacturer's 
service bulletin kits received free of charge by Lessee 
that are appropriate for the Aircraft and to the extent not 
installed, those kits will be furnished free of charge to 
Lessor; 
(h)	be in such external livery as advised by Lessor or at 
Lessor's option in Lessee's livery with a cash adjustment 
equivalent to the cost of Lessee's livery based on third 
party rates;
(i)	have all signs and decals clean, secure and legible; 
(j)	meet the requirements of FAR Part 36, Appendix C, Stage 3 
noise compliance as then in effect without waiver or 
restriction; and
(k)	have no open, deferred, continued, carry over or placarded 
log book items.
1.3 COMPONENTS 
(a) Each Flight Hour and Cycle controlled Hard Time Component 
(other than the APU) shall have not less than 3,000 Flight 
Hours of life remaining to the next scheduled removal in 
accordance with the Lessee's  Maintenance Program and shall 
be supported by appropriate certification documentation 
indicating TSN, CSN, TSO and CSO such as JAR form 1 or FAA 
form 8130-1; for this purpose "Hard Time Component" means 
any component which has a limited on-wing life in 
accordance with the Lessee's Maintenance Program and which 
can have life fully restored through appropriate 
maintenance;
(b) Each calendar-limited component including safety equipment 
will have not less than 12 months life remaining to the 
next scheduled removal in accordance with the Lessee's 
Maintenance Program;
(c) Each "on-condition" and "condition-monitored" component 
will be serviceable;
(d) The installed components as a group will have an average of 
total flight time since new of not more than that of the 
Airframe; 
(e) Each Airframe Life-Limited Component will have not less 
than 3,000 Flight Hours remaining to the next scheduled 
removal and will be supported by certification 
documentation necessary to demonstrate back-to-birth 
traceability; for this purpose "Airframe-Life Limited 
Component" means a component with an ultimate life which 
cannot be restored through appropriate maintenance. 
<PAGE>
1.4 ENGINES 
(a) Each Engine will be installed on the Aircraft and comply 
with the following:
(b) Each Engine will have not less than 3,500 Cycles expected 
life remaining to the next scheduled removal.  The expected 
life remaining will be determined by the inspection and 
checks accomplished by Lessor in accordance with this 
Agreement;
(c) Each Engine shall have just completed at the location for 
Lessor's acceptance on the Return Occasion a hot (including 
combustion chamber) and cold section video borescope 
inspection, which inspection shall be performed at Lessor's 
expense, and a power assurance run performed at Lessee's 
expense in accordance with the Lessee's Maintenance Program 
or Manufacturer's maintenance manual and any defects 
discovered in such inspections which exceed the Engine 
manufacturer's in-service limits shall be corrected at 
Lessee's expense.  Lessee shall cause such borescope 
inspections to be performed and to be recorded on videotape 
by an agency selected by Lessor and shall provide Lessor 
with a copy of such videotape on the Return Occasion.  No 
Engine shall be on "watch" for any reason requiring any 
special or out of sequence inspection.  Each such Engine 
shall comply with the operations specification of Lessee 
without waiver or exceptions.  All items beyond the Engine 
manufacturer's in-service limits shall be repaired; and 
(d) Each Engine will have no defect which places less than 
3,500 Cycles of remaining life pursuant to Manufacturer's 
or airworthiness requirements until removal. 
1.5 FUSELAGE, WINDOWS AND DOORS 
(a) The fuselage will be free of major dents and abrasions, 
loose or pulled or missing rivets, and all structural 
repairs shall be permanent repairs;
(b) Windows will be free of delamination, blemishes, crazing 
and will be properly sealed; and
(c) Doors will be free moving, correctly rigged and be fitted 
with serviceable seals. 
<PAGE>
1.6 WINGS AND EMPENNAGE 
(a) Leading edges will be free from damage; and
(b) Unpainted surfaces will be polished.
1.7 INTERIOR AND COCKPIT
Carpets and seat covers will be in good condition, clean 
and free of stains and meet FAR fire resistance 
regulations.
1.8 LANDING GEAR; WHEELS AND BRAKES
(a) The Landing Gear and wheel wells will be clean, free of 
leaks and repaired as necessary.  
(b) Each installed Landing Gear shall have no more Cycles 
accumulated than the Airframe and shall have not less than 
5,000 Flight Hours/3,000 Cycles and 18 months life 
remaining to the next scheduled removal in accordance with 
the Manufacturer's Maintenance Planning Document.
(c) The wheels and brakes will have not less than half of their 
useful life remaining.
1.9 RETURN OF AUXILIARY POWER UNIT (APU)
(a) The APU shall have just completed a borescope inspection 
and shall meet all air outputs and temperature limitations 
under load in accordance with the Lessee's Maintenance 
Program and the Manufacturer's maintenance manual, and any 
defects discovered in such inspection, which exceed the APU 
manufacturer's in service limits, shall be corrected at 
Lessee's expense.  The number of Flight Hours of APU 
operation to the next hot section inspection shall be no 
greater than 2,000 Flight Hours.
1.10 CORROSION 
(a) The Aircraft shall be in compliance with the Manufacturer's 
corrosion prevention and control program (CPCP) 
requirements.  All CPCP inspections which would normally be 
accomplished while access is provided during structural 
inspection in accordance with the Lessee's Maintenance 
Program during the Term shall have been accomplished;
(b) The entire fuselage will be substantially free from 
corrosion and will be adequately treated and a corrosion 
prevention program approved by Lessor will be in operation; 
and
<PAGE>
(c) Fuel tanks will be free from contamination and corrosion 
and a tank treatment program will be in operation. 
1.11 FUEL
(a) At redelivery, Lessor will pay to Lessee or Lessee will pay 
to Lessor (as the case may require) a cash adjustment in 
respect of the difference in fuel on board at Delivery 
versus redelivery, at the then prevailing cost of fuel at 
the Redelivery Location.
1.12 MAINTENANCE PROGRAM
(a) Prior to the Return Occasion and upon Lessor's request, 
Lessee will provide Lessor or its agent reasonable access 
to Lessee's Maintenance Program and the Aircraft Documents 
in order to facilitate the Aircraft's integration into any 
subsequent operator's fleet;
(b) Lessee will, if requested by Lessor to do so, upon return 
of the Aircraft deliver to Lessor a certified true current 
and complete copy of the Lessee's Maintenance Program. 
Lessor agrees that it will not disclose the contents of the 
Lessee's Maintenance Program to any person or entity except 
to the extent necessary to monitor Lessee's compliance with 
this Agreement and/or to bridge the maintenance program for 
the Aircraft from the Lessee's Maintenance Program to 
another program after the Return Occasion. 
<PAGE>
SCHEDULE 7

INSURANCE REQUIREMENTS 
1.13 TYPES OF INSURANCE.  The Insurances required to be 
maintained are as follows:
(a) HULL ALL RISKS of loss or damage whilst flying and on the 
ground with respect to the Aircraft on an agreed value 
basis for the Agreed Value and with a deductible not 
exceeding $750,000, or such other amount agreed by Lessor 
from time to time; 
(b) HULL WAR AND ALLIED PERILS, being such risks excluded from 
the Hull All Risks Policy to the fullest extent available 
from the leading international insurance markets, including 
confiscation and requisition by the State of Registration 
for the Agreed Value; 
(c) ALL RISKS (INCLUDING WAR AND ALLIED RISK) except when on 
the ground or in transit other than by air) property 
insurance on all Engines and Parts when not installed on 
the Aircraft on an "agreed value" basis for their full 
replacement value and including engine test and running 
risks; 
(d) AIRCRAFT THIRD PARTY, PROPERTY DAMAGE, PASSENGER, BAGGAGE, 
CARGO AND MAIL AND AIRLINE GENERAL THIRD PARTY (INCLUDING 
PRODUCTS) LEGAL LIABILITY for a combined single limit 
(bodily injury/property damage) of an amount not less than 
the Minimum Liability Coverage for the time being for any 
one occurrence (but in respect of products and personal 
injury liability, this limit may be an aggregate limit for 
any and all losses occurring during the currency of the 
policy). War and Allied Risks are also to be covered under 
the policy to the fullest extent available from the leading 
international insurance markets; 
1.14 Terms of Hull and Spares Insurance
All required hull and spares insurance, so far as it relates to 
the Aircraft, will: 
(a) ADDITIONAL ASSUREDS:  name Lessor and Owner and their 
respective successors and assigns as additional assureds 
for their respective rights and interests; 
<PAGE>
(b) SETTLEMENT OF LOSSES:  provide that any loss will be 
settled jointly with Owner and Lessee, and will be payable 
in Dollars to Owner, for the account of all interests, 
except where the loss does not exceed the Damage 
Notification Threshold, and Lessor has not notified the 
insurers to the contrary, in which case the loss will be 
settled with and paid to Lessee; 
(c) 50/50 PROVISION:  if separate Hull "all risks" and "war 
risks" insurances are arranged, include a 50/50 provision 
in accordance with market practice (AVS. 103 is the current 
market language); 
(d) NO OPTION TO REPLACE:  confirm that the insurers are not 
entitled to replace the Aircraft in the event of an insured 
Event of Loss; and
(e) NO DISCHARGE BY BROKER:  confirm that the insurers will not 
obtain a valid discharge of the obligations under the 
Insurances by payment to the broker, notwithstanding market 
practice to the contrary;
1.15 TERMS OF LIABILITY INSURANCE
All required liability insurances will:
(a) ADDITIONAL ASSUREDS:  include Lessor and each of the other 
Indemnitees, and their respective successors and assigns 
and their respective shareholders, subsidiaries, directors, 
officers, agents, employees and indemnitees, as additional 
insureds for their respective rights and interests, 
warranted, each as to itself only, no operational interest; 
(b) SEVERABILITY:  include a severability of interests clause 
which provides that the insurance, except for the limit of 
liability, will operate to give each assured the same 
protection as if there was a separate policy issued to each 
assured; and
(c) PRIMARY POLICY:  contain a provision confirming that the 
policy is primary without right of contribution and the 
liability of the insurers will not be affected by any other 
insurance of which Lessor , Owner or Lessee have the 
benefit so as to reduce the amount payable to the 
additional insureds under such policies; 
<PAGE>
1.16 TERMS OF ALL INSURANCES
All Insurances will:
(a) PRUDENT INDUSTRY PRACTICE:  be in accordance with prudent 
industry practice of persons operating similar aircraft in 
similar circumstances; 
(b) DOLLARS:  provide cover denominated in Dollars and any 
other currencies which Lessor may reasonably require in 
relation to liability insurance; 
(c) WORLDWIDE:  operate on a worldwide basis subject to such 
limitations and exclusions as Lessor may agree; 
(d) ACKNOWLEDGMENT:  acknowledge the insurer is aware (and has 
seen a copy) of this Agreement and that the Aircraft is 
owned by Owner;
(e) BREACH OF WARRANTY:  provide that, in relation to the 
interests of each of the additional assureds, the 
Insurances will not be invalidated by any act or omission 
by Lessee, or any other person other than the respective 
additional assureds seeking protection and shall insure the 
interests of each of the additional assureds regardless of 
any breach or violation by Lessee, or any other person 
other than the respective additional assured seeking 
protection of any warranty, declaration or condition, 
contained in such Insurances; 
(f) SUBROGATION:  provide that the insurers will hold harmless 
and waive any rights of recourse against the additional 
assureds or to be subrogated to any rights of Lessor or 
Lessee; 
(g) PREMIUMS:  provide that the additional assureds will have 
no obligation or responsibility for the payment of any 
premiums due (but reserve the right to pay the same should 
any of them elect so to do) and that the insurers will not 
exercise any right of set-off or counter-claim in respect 
of any premium due against the respective interests of the 
additional assureds other than outstanding premiums 
relating to the Aircraft, any Engine or Part the subject of 
the relevant claim; 
<PAGE>
(h) CANCELLATION/CHANGE:  provide that the Insurances will 
continue unaltered for the benefit of the additional 
assureds for at least 30 days after written notice by 
registered mail or telex of any cancellation, change, event 
of non-payment of premium or installment thereof has been 
sent to Lessor, except in the case of war risks for which 7 
days (or such lesser period as is or may be customarily 
available in respect of war risks or allied perils) will be 
given, or in the case of war between the 5 great powers or 
nuclear peril for which termination is automatic; 
(i) REINSURANCE:  if reinsurance is a requirement of this 
Agreement such reinsurance will:
(aa)	be on the same terms as the original insurances and 
will include the provisions of this Schedule;
(bb)	provide that notwithstanding any bankruptcy, 
insolvency, liquidation, dissolution or similar 
proceedings of or affecting the reinsured that the 
reinsurers' liability will be to make such payments as 
would have fallen due under the relevant policy of 
reinsurance if the reinsured had (immediately before 
such bankruptcy, insolvency, liquidation, dissolution 
or similar proceedings) discharged its obligations in 
full under the original insurance policies in respect 
of which the then relevant policy of reinsurance has 
been effected; and 
(cc)	contain a "cut-through" clause in the following form 
(or otherwise satisfactory to Lessor): "The Reinsurers 
and the Reinsured hereby mutually agree that in the 
event of any claim arising under the reinsurances in 
respect of a total loss or other claim where as 
provided by this Agreement dated as of January 5, 1999 
and made between AeroUSA, Inc. and Vanguard Airlines, 
Inc. such claim is to be paid to the person named as 
sole loss payee under the primary insurances, the 
Reinsurers will in lieu of payment to the Reinsured, 
its successors in interest and assigns pay to the 
person named as sole loss payee under the primary 
insurances effected by the Reinsured that portion of 
any loss due for which the Reinsurers would otherwise 
be liable to pay the Reinsured (subject to proof of 
loss), it being understood and agreed that any such 
payment by the Reinsurers will (to the extent of such 
payment) fully discharge and release the Reinsurers 
from any and all further liability in connection 
therewith"; subject to such provisions not 
contravening any Law of the State of Incorporation; 
<PAGE>
(j) INDEMNITIES:  accept and insure the indemnity provisions of 
this Agreement, to the extent of the risks covered by the 
policies. 
1.17 DEDUCTIBLES
Lessee shall be responsible for any and all deductibles under 
the Insurances.
1.18 APPLICATION OF INSURANCE PROCEEDS
The Insurances will be endorsed to provide for payment of 
proceeds as follows:
(a) EVENT OF LOSS:  all insurance payments received as the 
result of an Event of Loss occurring during the Term will 
be paid to Owner and Lessor will pay the balance of those 
amounts to Lessee after deduction of all amounts which may 
be or become payable by Lessee to Lessor under this 
Agreement and the Other Agreements (including under Clause 
11.1(b)); 
(b) EXCEEDING DAMAGE NOTIFICATION THRESHOLD:  all insurance 
proceeds of any property, damage or loss to the Aircraft, 
any Engine or any Part occurring during the Term not 
constituting an Event of Loss and in excess of the Damage 
Notification Threshold will be paid to Owner and applied in 
payment (or to reimburse Lessee) for repairs or replacement 
property upon Lessor being satisfied that the repairs or 
replacement have been effected in accordance with this 
Agreement.  Any balance remaining may be retained by Owner;
(c) BELOW DAMAGE NOTIFICATION THRESHOLD:  insurance proceeds in 
amounts below the Damage Notification Threshold may be paid 
by the insurer directly to Lessee; and
(d) DEFAULT:  notwithstanding the foregoing paragraphs, if at 
the time of the payment of any such insurance proceeds a 
Default has occurred and is continuing, all such proceeds 
will be paid to or retained by Owner to be applied toward 
payment of any amounts which may be or become payable by 
Lessee in such order as Lessor may elect.
To the extent that insurance proceeds are paid to Lessee, Lessee 
agrees to comply with the foregoing provisions and apply or pay 
over such proceeds as so required.
<PAGE>
SCHEDULE 8

FORM OF LEGAL OPINION 
To:	AeroUSA, Inc.
	Lee Farm Corporate Park
	83 Wooster Heights Road
	Danbury, CT  06810
GE Capital Aviation Services, Inc.
201 High Ridge Road
Stamford, CT  06927-4900
Attn:  Senior Vice President-Marketing
[Date]
Dear Sirs, 
1. You have asked us to render an opinion in connection with 
the transaction governed by or subject to, inter alia, the 
under mentioned documents. 
1.1 the Agreement as defined in subparagraph 1.3; 
1.2 the Articles of Incorporation and Bylaws of Lessee; and
1.3 all other documents, approvals and consents of whatever 
nature and wherever kept which it was, in our judgment and 
to our knowledge, necessary or appropriate to examine to 
enable us to give the opinion expressed below.  
Words and expressions used and not otherwise defined herein 
will bear the same meanings as defined in an Aircraft Lease 
Agreement dated as of January 5, 1999 between AeroUSA, Inc. 
("Lessor") and Vanguard Airlines, Inc. ("Lessee") in 
respect of one Boeing 737-200A aircraft with manufacturer's 
serial number 22979 together with the two installed Pratt & 
Whitney JT8D-15 engines (the "Aircraft").  As used herein 
the term "Agreement" means and includes the Aircraft Lease 
Agreement as defined in the Aircraft Lease Agreement.
2. Having considered the documents listed in paragraph 1 
above, and having regard to the relevant laws of the State 
of New York and the United States of America we are pleased 
to advise that in our opinion:
<PAGE>
(a) Lessee is a corporation duly organized and validly existing 
under the laws of [	], is qualified to do business as a 
foreign corporation in each jurisdiction where failure to 
so qualify would have a materially adverse effect on 
Lessee's business or its ability to perform its obligations 
under the Agreement, and is subject to suit in its own 
name, and, to the best of our knowledge, no steps have 
been, or are being, taken to appoint a receiver, 
liquidator, trustee or similar officer over, or to wind up, 
Lessee; 
(b) Lessee has the corporate power to enter into and perform, 
and has taken all necessary corporate action to authorize 
the entry into, execution, delivery and performance by it 
of, the Agreement and the transactions contemplated by the 
Agreement; 
(c) the entry into and performance by Lessee of, and the 
transactions contemplated by, the Agreement do not and will 
not:
(i) conflict with any laws binding on Lessee; or 
(ii) conflict with the Certificate of Incorporation or 
Bylaws of Lessee; or 
(iii) conflict with or result in default under any 
agreement or instrument which is binding upon Lessee 
or any of its assets or result in the creation of any 
Security Interest over any of its assets;
(d) no authorizations, consents, licenses, approvals and 
registrations (other than those which have been obtained 
and of which copies are attached hereto) are necessary or 
desirable to be obtained from any governmental or other 
regulatory authorities in [Missouri] having jurisdiction 
over Lessee or its properties to enable Lessee:
(i) to enter into and perform the transactions 
contemplated by the Agreement; 
(ii) to import the Aircraft into the United States for the 
duration of the Term; 
(iii) to operate the Aircraft to, from or within in the 
United States for the transport of fare-paying 
passengers; or 
<PAGE>
(iv) to make the payments provided for in the Agreement; 
(e) except for the filing and recordation of the Agreement with 
the FAA and the filing of the Financial Statements with [
	] (which filings have been duly made on or before 
this date) it is not necessary or desirable, to ensure the 
priority, validity and enforceability of all the 
obligations of Lessee under the Agreement that the 
Agreement be filed, registered, recorded or notarized in 
any public office or elsewhere or that any other instrument 
relating thereto be signed, delivered, filed, registered or 
recorded, that any tax or duty be paid or that any other 
action whatsoever be taken; 
(f) the interests of Lessor in the Aircraft are registered on 
the public register of aircraft of the Air Authority and no 
other steps are necessary or desirable to record or perfect 
Lessor's interest in the Aircraft in the United States or 
[]; 
(g) on termination of the Agreement (whether on expiry or 
otherwise) as contemplated in the Agreement, Lessor would 
be entitled:
(v) to repossess the Aircraft; 
(vi) to deregister the Aircraft from the register of the 
Air Authority; 
(vii) to export the Aircraft from [            ]; 
without requiring any further consents, approvals or 
licenses from any governmental or regulatory authority in 
the United States or [            ]; 
(h) the Agreement has been properly signed and delivered on 
behalf of Lessee and the obligations on the part of Lessee 
contained therein are valid and legally binding on and 
enforceable against Lessee under the laws of New York; 
(i) the events described in Schedule 9 paragraphs (g), (h) and 
(i) of the Agreement comprise an accurate and complete 
statement of all events and situations provided for by the 
laws of [] which may lead to the cessation of activities, 
winding up or dissolution of Lessee;
<PAGE>
(j) Lessee is a Certificated Air Carrier;
(k) Lessee is a "citizen of the United States" as defined in 
Section 40102 of Title 49 of the United States Code;
(l) Lessor is entitled, with respect to the Aircraft and the 
Agreement, to the benefits of a lessor under Section 1110 
of Title 11 of the United States Code;
(m) Lessee's chief executive office (as defined in the Uniform 
Commercial in effect in Kansas) is located at 7000 Squibb 
Road, 3rd Floor, Mission, Kansas 66202;
(n) the obligations of Lessee under the Agreement rank at least 
pari passu with all other present and future unsecured and 
unsubordinated (including contingent obligations) of 
Lessee; 
(o) there is no withholding tax or other Tax to be deducted 
from any payment whatsoever which may be made by Lessee 
pursuant to the Agreement; with respect to any 
withholdings, the provisions of Clauses 5.6, and Schedule 
11 of the Agreement are fully effective; and the 
arrangements contemplated by the Agreement do not give rise 
to any charge whatsoever to Taxes in []; 
(p) there is no applicable usury or interest limitation law in 
[] which may restrict the recovery of payments in 
accordance with the Agreement; 
(q) there are no registration, stamp or other taxes or duties 
of any kind payable in [] in connection with the signature, 
performance or enforcement by legal proceedings of the 
Agreement; 
(r) Lessor will not violate any law or regulation in [] nor 
become liable to tax in [] by reason of entering into the 
Agreement with Lessee, or performing its obligations 
thereunder; 
(s) it is not necessary to establish a place of business in [] 
in order to enforce any provisions of the Agreement; 
(t) the choice of the Governing Law to govern the Agreement 
will be upheld as a valid choice of law in any action in 
the courts of []; 
(u) the consent to the jurisdiction by Lessee contained in the 
Agreement is valid and binding on Lessee and not subject to 
revocation; 
<PAGE>
(v) any judgment for a definite sum given by the courts of [
	] against Lessee would be recognized and accepted by 
the courts of [] without re-trial or examination of the 
merits of the case; 
(w)   Lessee is subject to civil commercial law with respect 
to its obligations under the Agreement; and 
(ii) neither Lessee nor any of its assets is entitled to 
any right of immunity and the entry into and 
performance of the Agreement by Lessee constitute 
private and commercial acts; and
(x) there are no laws or other rules in [     ] (including, 
without limitation, emergency powers laws) pursuant to 
which Lessee may be deprived of the Aircraft by any 
Government Entity or any other person, other than Lessor or 
any assignee of Lessor. 
Yours faithfully,
<PAGE>
SCHEDULE 9

EVENTS OF DEFAULT
Each of the following events or conditions constitutes an Event 
of Default:
(a) NON-PAYMENt:  Lessee fails to make any payment under this 
Agreement on the due date; or 
(b) INSURANCE:  Lessee fails to comply with any provision of 
Clause 9 or Schedule 7, or any insurance required to be 
maintained under this Agreement is cancelled or terminated, 
or a notice of cancellation is given in respect of any such 
insurance; or 
(c) BREACH:  Lessee fails to comply with any other provision of 
this Agreement and, if such failure is in the opinion of 
Lessor capable of remedy, the failure continues for 10 days 
after notice from Lessor to Lessee; or
(d) REPRESENTATION:  any representation or warranty made (or 
deemed to be repeated) by Lessee in or pursuant to this 
Agreement or in any document or certificate or statement is 
or proves to have been incorrect in any material respect 
when made or deemed to be repeated; or 
(e) Cross-Default:
(i) any Financial Indebtedness of Lessee or any Lessee 
Affiliate in excess of $250,000 is not paid when due; 
or 
(ii) any such Financial Indebtedness in excess of $250,000 
becomes due or capable of being declared due prior to 
the date when it would otherwise have become due; or 
(iii) the security for any such Financial Indebtedness 
becomes enforceable; or
(iv) any event of default or termination event, howsoever 
described, occurs under any Other Agreement or any 
lease, hire purchase, conditional sale or credit sale 
agreement of Lessee or any Lessee Affiliate; or
<PAGE>
(f) APPROVALS:  any consent, authorization, license, 
certificate or approval of or registration with or 
declaration to any Government Entity in connection with 
this Agreement, including, without limitation:
(i) any authorization required by Lessee to authorize, or 
in connection with, the execution, delivery, validity, 
enforceability or admissibility in evidence of this 
Agreement or the performance by Lessee of its 
obligations under this Agreement; or
(ii) the registration of the Aircraft or the Aircraft's 
certificate of airworthiness; or
(iii) any airline license or air transport license 
required of Lessee including, without limitation, 
authority to operate the Aircraft under FAR Part 121 
and a Certificate of Public Convenience and Necessity 
issued under Section 4102 of Title 49 of the United 
States Code;
is modified in a manner unacceptable to Lessor or is 
withheld, or is revoked, suspended, canceled, withdrawn, 
terminated or not renewed, or otherwise ceases to be in 
full force; or
(g) INSOLVENCY:
(i) Lessee or any Lessee Affiliate is, or is deemed for 
the purposes of any relevant law to be, unable to pay 
its debts as they fall due or to be insolvent, or 
admits inability to pay its debts as they fall due; or
(ii) Lessee or any Lessee Affiliate suspends making 
payments on all or any class of its debts or announces 
an intention to do so, or a moratorium is declared in 
respect of any of its indebtedness; or
(h) BANKRUPTCY, ETC.:
(i) Lessee or any Lessee Affiliate consents to the 
appointment of a custodian, receiver, trustee or 
liquidator of itself or all or any material part of 
Lessee's property or Lessee's consolidated property, 
or Lessee or any Lessee Affiliate admits in writing 
its inability to, or is unable to, or does not, pay 
its debts generally as they come due, or makes a 
general assignment for the benefit of creditors, or 
Lessee or any Lessee Affiliate files a voluntary 
petition in bankruptcy or a voluntary petition seeking 
reorganization in a proceeding under any bankruptcy or 
insolvency Laws (as now or hereafter in effect) or any 
answer admitting the material allegations of a 
petition filed against Lessee or any Lessee Affiliate 
in any such proceeding, or Lessee or any Lessee 
Affiliate by voluntary petition, answer or consent 
seeks relief under the provisions of any other 
bankruptcy, insolvency or other similar Law providing 
for the reorganization or winding-up of corporations, 
or provides for an agreement, composition, extension 
or adjustment with its creditors, or any corporate 
action (including, without limitation, any board of 
directors or shareholder action) is taken by Lessee or 
any Lessee Affiliate in furtherance of any of the 
foregoing, whether or not the same is fully effected 
or accomplished; or
<PAGE>
(ii) an order, judgment or decree is entered by any court 
appointing, without the consent of Lessee or any 
Lessee Affiliate, a custodian, receiver, trustee or 
liquidator of Lessee or any Lessee Affiliate,  or of 
all or any material part of Lessee's property or 
Lessee's consolidated property is sequestered, and any 
such order, judgment or decree of appointment or 
sequestration remains in effect, undismissed, unstayed 
or unvacated for a period of 30 days after the date of 
entry thereof of at any time an order for relief is 
granted; or
(iii) an involuntary petition against Lessee or any 
Lessee Affiliate in a proceeding under the United 
States Federal Bankruptcy Laws or other insolvency 
Laws (as now or hereafter in effect) is filed and is 
not withdrawn or dismissed within 30 days thereafter 
or at any time an order for relief is granted in such 
proceeding, or if, under the provisions of any Law 
providing for reorganization or winding-up of 
corporations which may apply to Lessee or any Lessee 
Affiliate, any court of competent  jurisdiction 
assumes jurisdiction over, or custody or control of, 
Lessee or any Lessee Affiliate or of all or any 
material part of Lessee's property, or Lessee's 
consolidated property and such jurisdiction, custody 
or control remains in effect, unrelinquished, unstayed 
or unterminated for a period of 30 days or at any time 
an order for relief is granted in such proceeding; or
<PAGE>
(i) OTHER JURISDICTION:  there occurs in relation to Lessee or 
any Lessee Affiliate any event anywhere which, in the 
reasonable opinion of Lessor, corresponds with any of those 
mentioned in paragraphs (g) or (h) above; or
(j) UNLAWFUL:  it is or becomes unlawful for Lessee to perform 
any of its obligations under this Agreement, or this 
Agreement is or becomes wholly or partly invalid or 
unenforceable; or 
(k) SUSPENSION OF BUSINESS:  Lessee or any Lessee Affiliate 
suspends or ceases or threatens to suspend or cease to 
carry on all or a substantial part of its business; or
(l) DISPOSAL:  Lessee or any Lessee Affiliate disposes, conveys 
or transfers or threatens to dispose, convey or transfer of 
all or a material part of its assets, liquidates or 
dissolves or consolidates or merges with any other Person 
(whether by one or a series of transactions, related or 
not), other than for the purpose of a reorganization the 
terms of which have received the prior written approval of 
Lessor; or
(m) RIGHTS AND REMEDIES:  Lessee or any other Person claiming 
by or through Lessee challenges the existence, validity, 
enforceability or priority of the rights of Lessor as owner 
or as lessor or of Owner as owner in respect of the 
Aircraft; or
(n) CHANGE OF CONTROL:  any single person, or group of persons 
acquire control of Lessee without the previous consent in 
writing of Lessor not unreasonably withheld; or
(o) DELIVERY:  Lessee fails to comply with its obligation under 
Clause 4 to accept delivery of the Aircraft; or
(p) LETTER OF CREDIT:
(i) the issuer of the Letter of Credit fails to make any 
payment under the Letter of Credit when due; or 
(ii) the Letter of Credit is not in full force or, for any 
reason ceases to constitute the legal, valid and 
binding obligation of the issuer; or 
(iii) any of the events listed in paragraph (f)(i) 
above, with respect to the performance by the issuer 
of its obligations under the Letter of Credit, or 
paragraphs (g), (h) or (i) above apply to the issuer 
(references in those sub-paragraphs to Lessee being 
deemed to be to the issuer); or the issuer ceases or 
suspends its business operations; or 
<PAGE>
(iv) where applicable, the Letter of Credit is not renewed 
within the time required by Clause 5.12;
and each reference in this paragraph (p) to "the issuer" 
shall include a reference to any confirming bank for the 
Letter of Credit; or
(q) OWNERSHIP, LIENS AND RELATED MATTERS:  Lessee fails to 
timely comply with its obligations under Clause 8.6; or
(r) TRANSFER:  Lessee makes or permits any assignment or 
transfer of this Agreement, or any interest herein, or of 
the right to possession of the Aircraft, the Airframe, or 
any Engine except as expressly permitted by this Agreement; 
or
(s) REDELIVERY:  Lessee fails to return the Aircraft to Lessor 
on the Expiry Date in accordance with Clause 12; or
(t) LITIGATION:  a judgment of a court or tribunal for the 
payment of money not covered by insurance in excess of 
US$500,000 shall be rendered against Lessee and the same 
shall remain undischarged for a period of 90 days, unless 
during such period execution of such judgment shall have 
been effectively stayed by agreement of the parties 
involved or by court order or such judgment shall have been 
adequately bonded.
<PAGE>
SCHEDULE 10

INTENTIONALLY OMITTED FROM THE VERSION OF THIS DOCUMENT FILED 
WITH THE FAA AS CONTAINING CONFIDENTIAL AND PROPRIETARY 
INFORMATION
<PAGE>
SCHEDULE 11

TAX INDEMNITY
1. TAX INDEMNITY:
(a) GENERAL:
(i) Lessee will on demand pay and indemnify each Tax 
Indemnitee against all Taxes (other than Lessor Taxes) 
levied or imposed against or upon or payable by such 
Tax Indemnitee or Lessee and arising from, with 
respect to or in connection with the transactions 
pursuant to the Operative Documents, including (but 
not limited to) all Taxes relating or attributable to 
Lessee, any Operative Document or the Aircraft 
directly or indirectly in connection with the 
importation, exportation, registration, ownership, 
leasing, sub-leasing, purchase, delivery, possession, 
use, operation, repair, maintenance, overhaul, 
transportation, landing, storage, presence or 
redelivery of the Aircraft or any part thereof or any 
rent, receipts, insurance proceeds, income, 
indemnification payment or other amounts arising 
therefrom, or the making of any Equipment Change or 
the permanent replacement of any Engine.
(ii) All Taxes indemnified pursuant to this Clause 1 shall 
be paid by Lessee directly to the appropriate taxing 
authority (to the extent permitted by applicable Law) 
at or before the time prescribed by applicable Law.  
After any payment by Lessee of any Tax directly to a 
taxing authority, Lessee shall furnish to Lessor, on 
written request, a certified copy of a receipt for 
Lessee's payment of such Tax or such other evidence of 
payment of such Tax as is reasonably obtainable by 
Lessee and reasonably acceptable to Lessor.
(iii) Any amount payable by Lessee to an Tax Indemnitee 
pursuant to Clause 1 shall be paid within ten days 
after receipt of a written demand therefor from the 
relevant Tax Indemnitee accompanied by a written 
statement describing in reasonable detail the basis 
for such indemnity and the computation of the amount 
so payable and copies of all notices, invoices, 
assessments and correspondence relating to such 
<PAGE>
indemnified Tax, provided that if an amount of any 
indemnified Tax is being contested in accordance with 
Clause 7 and Lessee shall have duly performed (and 
shall continue to perform) all its obligations under 
Clause 1 with respect to such contest, then payment of 
the indemnity with respect to such Tax under Clause 1 
shall , at Lessee's election, be deferred until the 
date the contest has been completed.
(b) If any payment is made by Lessee under Clause 1(a) of 
Schedule 11 and the Tax Indemnitee receiving such payment 
in good faith determines that it has actually received a 
credit or deduction against, or relief or remission for, or 
payment of, any Tax paid or payable by the Tax Indemnitee 
in respect of or calculated with reference to the Tax 
giving rise to such payment, the Tax Indemnitee shall, to 
the extent that it can do so without prejudice to the 
retention of the amount of such credit, deduction, relief, 
remission or repayment and without leaving the Tax 
Indemnitee in any worse position than that in which it 
would have been had such payment of Tax not been required 
to be made, pay to Lessee such amount as the Tax Indemnitee 
shall in good faith have determined to be attributable to 
the relevant Tax.
2. Sales and Use Taxes: 
(a) Lessee shall pay to Lessor (or, if permitted by applicable 
Law and at Lessee's option, Lessee shall pay to the 
relevant tax authority for the account of Lessor), in 
addition to the amounts specified as "Rent" in Schedule 10:
(i) all sales, use, rental, value added, goods and 
services and similar taxes ("Sales Taxes") required to 
be paid to the tax authority of the jurisdiction in 
which the Delivery Location is situated or to the 
jurisdiction in which the Aircraft is habitually based 
with respect to the lease of the Aircraft to Lessee 
pursuant to the Operative Documents unless Lessee 
delivers to Lessor on or prior to the Delivery Date 
such exemption certificate or other document as may be 
required by applicable Law to evidence Lessee's 
entitlement to exemption from all Sales Taxes imposed 
by such jurisdiction with respect to the lease of the 
Aircraft pursuant to the Operative Documents; and
<PAGE>
(ii) all Sales Taxes required to be paid to the tax 
authority of any jurisdiction in which the Aircraft 
may be used, operated or otherwise located from time 
to time unless Lessee delivers to Lessor such 
exemption certificates or other documents as may be 
required by applicable Law to evidence Lessee's 
entitlement to exemption from all Sales Taxes imposed 
by each such jurisdiction with respect to the lease of 
the Aircraft pursuant to the Operative Documents.
(b) Lessee will cooperate with Lessor in connection with the 
preparation and filing of any exemption application or 
similar document that is reasonably necessary or desirable 
under applicable Law to avoid the imposition of any Sales 
Taxes with respect to the transactions contemplated by the 
Operative Documents.
(c) The specific obligations with respect to sales and use 
taxes set forth in this Clause 2 are in addition to, and 
are not in substitution for, the Lessee's obligation to 
indemnify for sales and use taxes pursuant to Clause 1.
3. Value Added Tax: 
(a) For the purposes of this Clause 3:
(i) "VAT" means value added tax and any goods and 
services, sales or turnover tax, imposition or levy of 
a like nature (other than Lessor Taxes); 
(ii) "supply" includes anything on or in respect of which 
VAT is chargeable.
(b) Lessee will pay to Lessor or the relevant taxing authority, 
as the case may be, the amount of any VAT chargeable in 
respect of any supply for VAT purposes under any of the 
Operative Documents.
(c) Each amount stated as payable by Lessee under any of the 
Operative Documents is exclusive of VAT (if any); if VAT is 
payable in respect of any amount as aforesaid, Lessee shall 
pay all such VAT and indemnify Lessor against any claims 
for the same (and where appropriate, Lessee shall increase 
the payments which would otherwise be required to be made 
hereunder so that Lessor is left in the same position as 
Lessor would have been in had no VAT been payable) and 
Lessee shall provide evidence to Lessor, if available, in 
respect of payment of any such VAT.
<PAGE>
4. Information:
(a) If Lessee is required by any applicable Law, or by any 
third party, to deliver any report or return in connection 
with any Taxes for which Lessee would be obligated to 
indemnify Lessor or any Indemnitee under the Operative 
Documents, Lessee will complete the same and, on request, 
supply a copy of the report or return to Lessor. 
(b) If any report, return or statement is required to be made 
by Lessor or any Indemnitee with respect to any Tax for 
which there is an indemnity obligation of Lessee under this 
Schedule 11 or otherwise under the Operative Documents, 
Lessee will promptly notify Lessor of the requirement and:
(i) if permitted by applicable Law, make and timely file 
such report, return or statement (except for any 
report, return or statement that Lessor has notified 
Lessee that Lessor or any Indemnitee intends to 
prepare and file), prepare such return in such manner 
as will show Lessor as lessor of the Aircraft and the 
ownership of the Aircraft in Lessor if required or 
appropriate, and provide Lessor upon request a copy of 
each such report, return or statement filed by Lessee, 
or
(ii) if Lessee is not permitted by applicable Law to file 
any such report, return or statement, Lessee will 
prepare and deliver to Lessor a proposed form of such 
report, return or statement within a reasonable time 
prior to the time such report, return or statement is 
to be filed.
Lessee will provide such information and documents as 
Lessor may reasonably request to enable Lessor to comply 
with its tax filing, audit and litigation obligations.
5. Indemnity Payments to be Made on an After-Tax Basis:
Lessee agrees that, with respect to any payment or indemnity 
pursuant to Clause 1 (Tax Indemnity), Clause 2 (Sales and Use 
Taxes), or Clause 3 (Value Added Tax) of this Schedule 11 or 
Clause 10 (Indemnity) of the Agreement to or for the benefit of 
any Indemnitee, Lessee's indemnity obligations shall include 
such amount as may be necessary to hold such Tax Indemnitee 
<PAGE>
harmless on an After-Tax Basis from all Taxes required to be 
paid by such Tax Indemnitee with respect to such payment or 
indemnity (including any payments pursuant to this Clause 5, 
determined based on the assumption that at the time each such 
payment or indemnity is accrued by the relevant Indemnitee, such 
payment or indemnity will be subject to (i) United States 
Federal income tax at the highest marginal statutory tax rate 
applicable to corporations, (ii) United States state and local 
income taxes at the composite of the highest marginal statutory 
tax rates applicable to the Tax Indemnitee and (iii) income 
taxes (if any) imposed by countries outside the United States at 
the actual rates imposed on the relevant Indemnitee.
6. Late Payment Interest:
If Lessee fails to pay any amount payable under this Agreement 
on the due date, Lessee will pay on demand from time to time to 
Lessor interest (both before and after judgment) on that amount, 
from the due date to the date of payment in full by Lessee to 
Lessor, at the Interest Rate; provided, however, that in no 
event shall such rate exceed the maximum permitted by Law.  All 
such interest will be compounded monthly and calculated on the 
basis of the actual number of days elapsed in the month assuming 
a 30 day month and a 360 day year. 
7. Contest:
(a) If Lessor receives a written claim for any Tax for which 
Lessee would be required to pay an indemnity pursuant to 
Clause 1, Clause 2 or Clause 3 of this Schedule 11, Lessor 
shall notify Lessee promptly of such claim, provided that 
any failure to provide such notice will not relieve Lessee 
of any indemnification obligation pursuant to Clause 1, 
Clause 2 or Clause 3 except to the extent that Lessee's 
ability to defend such claim has been materially adversely 
affected by such failure.  If requested by Lessee in 
writing promptly after receipt of Lessor's notice, Lessor 
shall, upon receipt of indemnity satisfactory to it and at 
the expense of Lessee (including, without limitation, all 
costs, expenses, legal and accountants' fees and 
disbursements, and penalties, interest and additions to tax 
incurred in contesting such claim) in good faith contest or 
(if permitted by applicable Law) permit Lessee to contest 
such claim by (i) resisting payment thereof if practicable 
and appropriate, (ii) not paying the same except under 
protest if protest is necessary and proper, or (iii) if 
payment is made, using reasonable efforts to obtain a 
refund of such Taxes in appropriate administrative and 
<PAGE>
judicial proceedings.  Lessor shall determine the method of 
any contest conducted by Lessor and (in good faith 
consultation with Lessee) control the conduct thereof.  
Lessee shall determine the method of any contest conducted 
by Lessee and (in good faith consultation with Lessor) 
control the conduct thereof.  Lessee shall pay in full all 
payments of Rent and other amounts payable pursuant to the 
Operative Documents, without reduction for or on account of 
any Tax, while such contest is continuing.  Lessor shall 
not be required to contest, or to continue to contest, a 
claim for Taxes under this Clause 7 if (x) such contest 
would result in a risk of criminal penalties or of a sale, 
forfeiture or loss of, or the imposition of a Lien (other 
than a Permitted Lien) on (except to the extent covered by 
a bond reasonably acceptable to Lessor), or (y) Lessee 
shall not have furnished an opinion of independent tax 
counsel selected by Lessor and reasonably satisfactory to 
Lessee, that a reasonable basis exists for such contest, or 
(z) a Default or an Event of Default shall be continuing 
(unless Lessee shall have provided security reasonably 
satisfactory to Lessor securing Lessee's performance of its 
obligations under this Schedule 11).  If Lessor contests 
any claim for Taxes by making a payment and seeking a 
refund thereof, then Lessee shall advance to Lessor, on an 
interest-free basis, an amount equal to the Taxes to be 
paid by Lessor in connection with the contest and shall 
indemnify Lessor on an After-Tax Basis for any adverse tax 
consequences to Lessor of such interest-free advance.  Upon 
the final determination of any contest pursuant to this 
Clause 7 in respect of any Taxes for which Lessee shall 
have made an advance to Lessor in accordance with the 
immediately preceding sentence, the amount of Lessee's 
obligation shall be determined as if such advance had not 
been made; any indemnity obligation of Lessee to Lessor 
under this Schedule 11 and Lessor's obligation to repay the 
advance will be satisfied first by setoff against each 
other, and any difference owing by either party shall be 
paid within ten days after such final determination.
(b) If Lessor obtains a refund of all or any part of any Taxes 
for which a full indemnity was paid by Lessee, Lessor shall 
pay Lessee the amount of such refund, reduced by any Taxes 
imposed on Lessor on receipt or accrual of such refund and 
increased by any Taxes saved by Lessor by reason of the 
deductibility of such payment by Lessor.  If, in addition 
to such refund, Lessor receives an amount of interest on 
such refund, Lessor shall pay to Lessee the portion of such 
interest which is fairly attributable to such refund, 
<PAGE>
reduced by any Taxes imposed by Lessor on receipt or 
accrual of such interest and increased by any Taxes saved 
by reason of the deductibility of such payment by Lessor.  
Lessor shall not be required to make any payment to Lessee 
pursuant to this Clause 7 if, and for so long as, an Event 
of Default shall have occurred and be continuing.
(c) Lessor in its sole discretion (by written notice to Lessee) 
may waive its rights to indemnification pursuant to Clause 
1 with respect to any claim for any Tax and may refrain 
from contesting or continuing the contest of such claim, in 
which event Lessee shall have no obligation to indemnify 
Lessor for the Taxes that are the subject of such claim.  
If Lessor agrees to a settlement of any contest conducted 
pursuant to this Clause 7 without the prior written consent 
of Lessee, which consent shall not be unreasonably 
withheld, then Lessor shall be deemed to have waived its 
rights to the indemnification provided for in Clause 7 with 
respect to the Tax liability accepted in such settlement.
<PAGE>
SCHEDULE 12

FORM OF LEASE TERMINATION CERTIFICATE
The undersigned hereby certify that the Aircraft Lease Agreement 
dated as of January 5, 1999 between the undersigned Lessor and 
undersigned Lessee, and as further described in the Appendix 
attached hereto, has terminated and the aircraft and aircraft 
engines covered thereby are no longer subject to the terms 
thereof.  This certificate may be executed in one or more 
counterparts each of which when taken together shall constitute 
one and the same instrument.
DATED this __________ day of ____________________, 
__________
LESSOR						LESSEE
AEROUSA, INC.					VANGUARD AIRLINES, INC.
By:__________________________		By:________________________
Title:________________________	Title:___________________
<PAGE>
APPENDIX
FAA RECORDING DATE						FAA CONVEYANCE NO.
<PAGE>
SCHEDULE 13

LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1, dated ___________, ______, between  
AeroUSA, Inc., a corporation organized under the laws of 
______________ ("Lessor"), and Vanguard Airlines, Inc., a 
corporation organized under the laws of the 
____________________("Lessee").
Lessor and Lessee have previously entered into that certain 
Aircraft Lease Agreement dated as of January 5, 1999 (herein 
referred to as the "Agreement" and the defined terms therein 
being hereinafter used with the same meaning).  The Agreement 
provides for the execution and delivery from time to time of a 
Lease Supplement substantially in the form hereof for the 
purpose of leasing the aircraft described below under the 
Agreement as and when delivered by Lessor to Lessee in 
accordance with the terms thereof.
The Agreement and this Lease Supplement relate to the Aircraft, 
Engines and Parts as more precisely described below and in the 
Certificate of Technical Acceptance.  A counterpart of the 
Agreement is attached hereto and this Lease Supplement and the 
Agreement shall form one document.
In consideration of the premises and other good and sufficient 
consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the 
Agreement and Lessee hereby accepts, acknowledges receipt of 
possession and leases from Lessor under the Agreement, that 
certain Boeing 737-200A commercial jet Aircraft, and the two (2) 
Pratt & Whitney JT8D-15 Engines (each of which Engines has 750 
or more rated takeoff horsepower or the equivalent of such 
horsepower) described in Schedule 1 hereto, together with the 
Aircraft Documents described in the Agreement (the "Delivered 
Aircraft").
2. The Delivery Date of the Delivered Aircraft is the date of 
this Lease Supplement set forth in the opening paragraph hereof.
3. The Term for the Delivered Aircraft shall commence on the 
Delivery Date and shall end on the Expiry Date.
4. The amount of Rent for the Delivered Aircraft is set forth 
in Schedule 10 to the Agreement.
<PAGE>
5. Lessee hereby confirms to Lessor that (i) the Delivered 
Aircraft and each delivered Engine have been duly marked in 
accordance with the terms of Clause 8.6(d) of the Agreement, 
(ii) the Aircraft is insured as required by the Agreement, 
(iii) the representations and warranties of Lessee referred to 
in Clause 2 of the Agreement are hereby repeated with effect as 
of the date first above written, (iv) having inspected the 
Delivered Aircraft, Lessee acknowledges that the Delivered 
Aircraft satisfies all conditions required for Lessee's 
acceptance of delivery as set forth in the Agreement,  and (v) 
the execution and delivery of this Lease Supplement signifies 
absolute and irrevocable acceptance by Lessee of the Delivered 
Aircraft for all purposes hereof and of the Agreement.
6. All of the terms and provisions of the Agreement are hereby 
incorporated by reference in this Lease Supplement to the same 
extent as if fully set forth herein.
7. This Lease Supplement may be executed in any number of 
counterparts; each of such counterparts, shall for all purposes 
be deemed to be an original; and all such counterparts shall 
together constitute but one and the same Lease Supplement.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease 
Supplement No. 1  to be duly executed as of the day and year 
first above written.
LESSOR,						LESSEE,
AEROUSA, INC.					VANGUARD AIRLINES, INC.
By:_______________________		By:________________________
Name:_____________________		Name:_____________________
Title:_______________________		Title:_______________________
<PAGE>
SCHEDULE 1

TO

LEASE SUPPLEMENT NO. ___

ONE USED

BOEING 737-200A
1.	Airframe
(a)	Registration Mark: ______________________________
(b)	Manufacturer's Serial No.: 	22979
2.	Installed Engines
(a)	Model No.: 	JT8D-15
Serial Nos.: 	708303 and 702951
Each of the above-described Aircraft Engines is 750 or more 
rated takeoff horsepower or its equivalent.
<PAGE>
SCHEDULE 14

QUIET ENJOYMENT LETTER
From:	__________ ("Owner")
To:	Vanguard Airlines, Inc. ("Lessee")
Dated ________________,___
Ladies and Gentlemen:
AIRCRAFT LEASE AGREEMENT DATED AS OF JANUARY 5, 1999 BETWEEN 
_______________ ("LESSOR") AND LESSEE (THE "LEASE") RELATING TO 
ONE BOEING 737-200A AIRCRAFT BEARING MANUFACTURER'S SERIAL 
NUMBER 22979 (THE "AIRCRAFT")
Capitalized words and expressions defined in the Lease, shall 
unless the context otherwise requires, bear the same meanings 
herein.
1.  We confirm to you that we will not interfere with the quiet 
possession and use of the Aircraft by Lessee throughout the 
Term, so long as Lessor has not issued a termination notice 
pursuant to Clause 13 of the Lease in respect of an Event 
of Default.
2.  The foregoing undertaking is not to be construed as 
restricting our rights to dispose of the Aircraft to such 
persons and on such terms as we consider appropriate.  
However, if we exercise such rights during the Term, and 
provided that the condition referred to in paragraph 1 
above continues to be fulfilled at the time of such 
disposal, we will (subject to any requirements or 
restrictions imposed by applicable law) dispose of the 
Aircraft expressly subject to the Lease and on terms that 
require the purchaser to issue an undertaking to Lessee 
that it will not interfere with the quiet possession and 
use of the Aircraft by Lessee throughout the remaining 
portion of the Term, so long as the condition referred to 
in paragraph 1 above continues to be fulfilled.
3.  The rights conferred by this letter are granted only to 
Lessee and do not extend to any assignee, successor or 
sub-lessee of Lessee.
<PAGE>
Please countersign this letter in order to confirm your 
agreement to the arrangements contained herein.
Yours faithfully,
[OWNER]
____________________________
Agreed and accepted:
[LESSEE]
____________________________
<PAGE>
INDEX
CLAUSE	PAGE
1.	INTERPRETATION	1
1.1	Definitions	1
1.2	Construction	1
2.	REPRESENTATIONS AND WARRANTIES	2
2.1	Lessee's Representations and Warranties	2
2.2	Repetition	2
2.3	Lessor's Representations and Warranties	2
3.	CONDITIONS PRECEDENT	2
3.1	Lessee Conditions Precedent	2
3.2	Waiver	2
3.3	Lessor Conditions Precedent	2
3.4	Waiver	2
4.	COMMENCEMENT	2
4.1	Leasing	2
4.2	Delivery	3
4.3	Delayed Delivery	3
4.4	Licenses	4
4.5	Inspection	4
4.6	Indemnity	5
5.	PAYMENTS	5
5.1	Deposit	5
5.2	Rental Periods	5
5.3	Rent	5
5.4	Supplemental Rent	5
5.5	Payments	6
5.6	Withholding	6
5.7	Taxes and Other Outgoings	7
5.8	Tax Indemnity	7
5.9	Lessor Obligations Following Expiry Date	7
5.10	Net Lease	7
<PAGE>
5.11	Further Provisions regarding Deposit:	8
5.12	Letter of Credit:	9
5.13	Reserved	9
5.14	Late Payment Interest	9
5.15	Currency	10
5.16	Certificates	10
5.17	Appropriation	10
5.18	Set-off	10
5.19	Expenses	10
6.	MANUFACTURER'S WARRANTIES	11
6.1	Assignment	11
6.2	Proceeds	11
6.3	Parts	12
6.4	Agreement	12
7.	LESSOR'S COVENANTS	12
7.1	Quiet Enjoyment	12
7.2	Lessor Liens	12
7.3	Maintenance Contributions	12
7.4	Payment for Certain Components:	13
8.	LESSEE'S COVENANTS	13
8.1	Duration	13
8.2	Information	13
8.3	Lawful and Safe Operation	14
8.4	Subleasing	15
8.5	Inspection	16
8.6	Ownership; Property Interests; Related Matters	16
8.7	General	17
8.8	Records	18
8.9	Protection	18
8.10	Maintenance and Repair	19
8.11	Removal/Interchange of Engines	19
8.12	Removal/Interchange of Parts	20
8.13	Pooling of Engines and Parts	21
<PAGE>
8.14	Equipment Changes	21
8.15	Title on an Equipment Change	21
9.	INSURANCE	22
9.1	Insurances	22
9.2	Change	22
9.3	Insurance Undertakings and Information	22
9.4	Failure to Insure	23
9.5	Continuing Indemnity	23
10.	INDEMNITY	23
10.1	General	23
10.2	Duration	24
10.3	Subrogation	24
11.	EVENTS OF LOSS	25
11.1	Events of Loss	25
11.2	Requisition	26
12.	RETURN OF AIRCRAFT	27
12.1	Return	27
12.2	Non-Compliance	27
12.3	Redelivery	28
12.4	Acknowledgment	28
13.	DEFAULT	28
13.1	Events	28
13.2	Rights and Remedies	28
13.3	Power of Attorney	32
13.4	Mitigation Credit	32
14.	ASSIGNMENT	33
14.1	Lessee	33
14.2	Assignment by Lessor	33
14.3	Transfer by Lessor	33
14.4	Conditions of Rights of Assignment and Transfer	33
15.	ILLEGALITY	34
16.	MISCELLANEOUS	35
16.1	Waivers, Remedies Cumulative	35
<PAGE>
16.2	Delegation	35
16.3	Severability	35
16.4	Remedy	35
16.5	Time of Essence	35
16.6	Notices	35
16.7	Governing Law and Jurisdiction	36
16.8	Sole and Entire Agreement	38
16.9	Indemnitees	38
16.10	Counterparts	38
16.11	Language	38
17.	DISCLAIMERS AND WAIVERS	38
17.1	Exclusion	38
17.2	Waiver	40
17.3	Disclaimer Of Consequential Damages	40
17.4	Confirmation	40
18.	BROKERS AND OTHER THIRD PARTIES.	40
18.1	No Brokers	40
18.2	Indemnity	40
19.	SECTION 1110	40
20.	USURY LAWS	41
21.	MODIFICATION OR REVISION	1
SCHEDULE 1  DEFINITIONS	1
SCHEDULE 2  REPRESENTATIONS AND WARRANTIES	1
SCHEDULE 3  CONDITIONS PRECEDENT	1
SCHEDULE 4  PART 1  DESCRIPTION OF AIRCRAFT	1
PART 2  DELIVERY CONDITION REQUIREMENTS	2
SCHEDULE 5  CERTIFICATE OF TECHNICAL ACCEPTANCE	1
SCHEDULE 6  PROCEDURES AND OPERATING CONDITION AT 
REDELIVERY	1
SCHEDULE 7  INSURANCE REQUIREMENTS	1
SCHEDULE 8  FORM OF LEGAL OPINION	1
SCHEDULE 9  EVENTS OF DEFAULT	1
SCHEDULE 10  CERTAIN FINANCIAL TERMS	1
<PAGE>

SCHEDULE 11  TAX INDEMNITY	1
SCHEDULE 12  FORM OF LEASE TERMINATION CERTIFICATE	1
SCHEDULE 13  LEASE SUPPLEMENT NO. 1	1
SCHEDULE 14  QUIET ENJOYMENT LETTER	1
<PAGE>

AIRCRAFT LEASE AGREEMENT

Dated as of January 5, 1999
between 
 AEROUSA, INC.
as Lessor 
and 
 VANGUARD AIRLINES, INC.
as Lessee 
 
IN RESPECT OF AIRCRAFT:	One Boeing 737-200A
SERIAL NO:			22979
FAA REGISTRATION NO.:	
NOTE:  THIS AIRCRAFT LEASE AGREEMENT HAS BEEN EXECUTED IN 
SEVERAL COUNTERPARTS OF WHICH THIS IS COUNTERPART NO. ____.  
SEE CLAUSE 16.10 HEREOF FOR INFORMATION CONCERNING THE 
DISTINCTION BETWEEN VARIOUS COUNTERPARTS.
<PAGE>